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Rand Outperforms As China Optimism Supports Commodity FX

ZAR

USD/ZAR moves sharply lower, renewing a downswing seen in Asia-Pac hours, as optimism surrounding China's COVID-19 situation lends support to commodity-tied currencies. The sell-off in USD/ZAR has broadly tracked BBDXY depreciation, but on top of that, the Rand is the best performer in the EMEA space.

  • The ZAR17.1854/17.1891 has mounted firm resistance over the past three days, with USD/ZAR now happy to move away from these levels. The pair last deals at ZAR16.9820, ~1,720 pips lower on the day. Losses past Nov 24 low of ZAR16.9073 would clear the way to key support from Aug 25 low of ZAR16.7102. Bulls look for a rebound above the aforementioned zone, followed by trendline support-turned-resistance at 17.3348.
  • A slight downtick in China's COVID-19 cases, no major escalation in social unrest and a press briefing from the NHC supported sentiment in Asia, before focus turned to Germany's CPI reading, with the figure for North Rhine Westphalia (a national bellwether) showing that prices fell on a monthly basis. In South Africa, unemployment data and the SARB's Financial Stability Review are the highlights today.
  • The aggregate BBG Commodity Index has added 0.80% so far, while the precious metals subindex is up 1.18% and testing session highs. Gold keeps creeping higher, having added over 0.9% as of yet.
  • South Africa's 10-year inflation breakeven rate resumes decline and last sits 6.21%, still some way off recent cyclical lows of 6.00%.
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USD/ZAR moves sharply lower, renewing a downswing seen in Asia-Pac hours, as optimism surrounding China's COVID-19 situation lends support to commodity-tied currencies. The sell-off in USD/ZAR has broadly tracked BBDXY depreciation, but on top of that, the Rand is the best performer in the EMEA space.

  • The ZAR17.1854/17.1891 has mounted firm resistance over the past three days, with USD/ZAR now happy to move away from these levels. The pair last deals at ZAR16.9820, ~1,720 pips lower on the day. Losses past Nov 24 low of ZAR16.9073 would clear the way to key support from Aug 25 low of ZAR16.7102. Bulls look for a rebound above the aforementioned zone, followed by trendline support-turned-resistance at 17.3348.
  • A slight downtick in China's COVID-19 cases, no major escalation in social unrest and a press briefing from the NHC supported sentiment in Asia, before focus turned to Germany's CPI reading, with the figure for North Rhine Westphalia (a national bellwether) showing that prices fell on a monthly basis. In South Africa, unemployment data and the SARB's Financial Stability Review are the highlights today.
  • The aggregate BBG Commodity Index has added 0.80% so far, while the precious metals subindex is up 1.18% and testing session highs. Gold keeps creeping higher, having added over 0.9% as of yet.
  • South Africa's 10-year inflation breakeven rate resumes decline and last sits 6.21%, still some way off recent cyclical lows of 6.00%.