Rand Loses Ground, USD/ZAR Returns Above 18.0

Spot USD/ZAR has firmed a tad after dipping below the psychologically significant 18.0 figure for the first time in almost a year, with optimism around the outcome of the recent South African election helping propel the latest rand rally. Today's gains have allowed the pair to return above 18.0, with USD/ZAR last seen at 18.0854, around 1,300 pips higher on the session.

• From a technical perspective, the key resistance is provided by round figure/Jun 6 high of 19.0000/54. On the flip side, a pullback below 18.0 would open up 17.4193, the low print of Jul 27, 2023.
• President Ramaphosa is facing the challenge of putting together a cabinet taking into consideration the interests and expectations of all parties which expressed their intention to join the so-called government of national unity (GNU).
• SAGB yields are notably higher across the curve, with 5- and 10-year breakeven rates posting sharp reversals from recent cyclical lows.
• The composite BG Commodity Index is marginally firmer, precious metals are up 0.6%.