Rand Loses Ground For Second Consecutive Day

Spot USD/ZAR added more than 1% yesterday and is building on these gains this morning as wider risk sentiment soured into the weekend. The rate's upswing came alongside a parallel move in the BBDXY index, with the greenback benefitting from EUR sales in reaction to weak European PMI data today.

• When this is being typed, spot USD/ZAR trades at ZAR18.6714, up ~1,490 pips on the session. The rate has so far rejected resistance from the 20-EMA at ZAR18.6942. A break here would bring Jun 1 high of ZAR19.9204 into view. Bears look for a resumption of losses towards Jun 16 low of ZAR18.1250 and the ZAR18.00 figure.
• National Rationalised Specifications (NRS) Chair Vally Padayachee said that while South Africa is unlikely to experience a complete collapse of its electricity grid, it is possible that load-shedding will move to higher levels for the rest of June until August. Padayachee is seen as one of the front-runners to become the next Eskom CEO.
• Standard Bank said that "the rand can still lose further ground against the dollar over the coming days" as "the underlying issues of South Africa's fiscus have not gone away and the twin deficits have the potential to inflict a poisonous bite," while the rand's earlier "cheapness has been somewhat eroded."