Rand On Back Foot Ahead Of Wednesday's Budget Speech

Spot USD/ZAR shot higher into the European morning in the absence of a parallel move in the BBDXY Index, but we have been unable to pin the move on any specific local headline, with market participants preparing for tomorrow's budget speech. USD/ZAR overnight implied volatility has edged higher this morning.

• Spot USD/ZAR last changes hands at 19.0438, around 830 pips above neutral levels. A break above Feb 14/Jan 22 highs of 19.1912/19.2180 would mark the resumption of an uptrend. Meanwhile, bears would get some reprieve should they manage to force a breach of Feb 2 low of 18.5578.
• The Treasury will sell ZAR1.3bn of '31 bonds, ZAR1.3bn of '40 bonds and ZAR1.3bn of '48 bonds in its final weekly auction before Finance Minister Godongwana's budget speech. The official is facing a difficult balancing act, having to reckon with a weak fiscal position as well as political pressure generated by this year's elections.
• The commodity complex is slightly softer this morning, while the precious metals subindex sits 0.1% lower on the session, snapping a three-day winning streak.
• South Africa's Q4 unemployment rate will hit the wires at 09:30GMT/11:30SAST.