Rand On Back Foot, BRICS Summit In Focus This Week

Spot USD/ZAR changes hands at 19.0627, slightly higher on the day. On the topside, the initial technical target is provided by 19.3301, the 76.4% retracement of the Jun 1 - Jul 27 sell-off. Conversely, the 50-EMA provides the initial layer of support at 18.5936.

• The PBOC surprised overnight by keeping its 5-Year Loan Prime Rate unchanged and delivering a smaller-than-expected 10bp cut to its 1-Year Loan Prime Rate. This conservative action on the interest-rate front may have wrong-footed the market in the wake of recent signalling from Chinese authorities anticipating increased support for the economy. Rand traders are closely watching China's economic recovery, due to its consequences for the demand for South African commodities.
• The commodity complex is firmer today, with the BBG Commodity Index last seen ~0.5% higher on the day. However, the precious metals subindex operates just marginally above neutral levels.
• SAGB yields sit higher across the curve, taking their cue from global yields. South Africa's 10-year breakeven inflation rate sits at 6.96% after printing its best levels since June 7.
• The main points of note on the South Africa's calendar this week are the BRICS summit (starting tomorrow) and July CPI data (Wednesday).