Rand On Defensive, Implied Volatilities Elevated Ahead Of Phala Phala Vote

USD/ZAR has advanced in morning trade on the back of domestic political risk and plenty of central bank decisions overseas this week. The rate last deals at ZAR17.6765, some 970 pips better off, having punched through yesterday's highs. Bulls now set their sights on Dec 1 high of ZAR17.9596, a break here would support their case. Bears look for a pullback under Dec 7 low of ZAR17.0617.

• The key imminent risk event at home is a parliamentary vote on the Phala Phala report scheduled for today, with News24 reporting that some lawmakers from the ruling ANC were considering voting with the opposition. Still, the vote will be taken by open ballot, which makes it easier for party leaders to ensure discipline.
• Implieds are elevated ahead of the National Assembly session and the ANC elective conference this week. USD/ZAR overnight implied volatility briefly topped 35%, printing best levels since mid-Nov. One-week tenor is creeping higher towards a recent cyclical peak.
• The commodity complex has garnered some strength, with the BBG Commodity Index up nearly 1% on the day. The precious metals subindex has lagged that rally, adding just 0.4% so far, but still remains in positive territory.
• Local-currency bond yields are marginally higher across the curve, with 10-year breakeven inflation rate last sitting at 6.45%, a new one-week high.