Rand Looks Through In-Line CPI Data, Fitch's Warning Adds Pressure

USD/ZAR has been creeping higher from the off, with the South African Rand underperforming all its EMEA peers. The rate last deals at ZAR18.0325, up ~1,340 pips on the session, with bulls looking to retest Feb 13 high of ZAR18.0873 before challenging the 76.4% retracement of the Oct 13 - Jan 12 bear leg at ZAR18.1363. Conversely, bears keep an eye on Feb 2 low of ZAR16.9317.

• South Africa's CPI figures fell broadly in line with expectations. Headline inflation slowed to +6.9% Y/Y, while core printed 0.1pp below the expected +5.0% Y/Y. The South African Rand briefly regained poise in reaction to the data but quickly resumed its earlier sell-off.
• Fitch warned that while South Africa's credit rating might absorb a temporary impact of load-shedding on the country's key economic metrics, a failure to address the ongoing energy crisis over the medium term could amplify downward pressure on the rating.
• From a cross-asset perspective, weakness in the commodity complex is no good news for the ZAR. The composite BBG Commodity Index is ~0.9% worse off, with the precious metals subindex down ~1.2% as it prints new cyclical lows.
• Local-currency bond yields have advanced across the curve, with South Africa's 10-year breakeven inflation rate last seen at 6.13%.