Rand Loses Shine, Worrying Eskom Headlines Do Little To Help

Spot USD/ZAR is ticking higher after a three-day sell-off, last dealing at 18.7196, around 650 pips above neutral levels. Technically, a rally above Oct 26 high of 19.2710 is needed to confirm that bullish momentum is picking up. Meanwhile, losses past Nov 15 low of 18.1117 would suggest that bears are in the driving seat.

• The composite BBG Commodity Index sits 0.3% higher on the day, while precious metals cling onto yesterday's advance, adding another 0.2% this morning. SAGB curve has bull steepened, with 10-year breakeven inflation rate dropping to 6.57%.
• Local news flow has seen a flurry of headlines tempering earlier optimism surrounding the two-notch upgrade to Eskom's credit rating. The focus turned to the fact that the rating review came with a warning that the utility remains in "quite a fragile" state.
• Separately, the loadshedding outlook remains worrying, with Eskom expected to continue implementing power cuts in the near term. In addition, experts suggested that blackouts experienced by some consumers may have exceeded officially communicated levels as power supply to businesses is being prioritised.