Rand Remains Firmer, Bonds Soften After South African CPI Beats Expectations

Spot USD/ZAR snaps a three-day winning streak, showing a limited reaction to expectation-beating South African inflation data, even as the local FI space weakened. The rate last sits at ZAR18.5369, down ~220 pips on the day, with bears keeping an eye on Mar 14 low of ZAR18.0420. Conversely, bulls look for a rebound above Mar 8 high of ZAR18.7192.

• South Africa's headline inflation unexpectedly accelerated to +7.0% Y/Y last month from +6.9% prior, beating the +6.8% median estimate in a Bloomberg survey. Core CPI inflation quickened to +5.2% Y/Y from +4.9% versus +5.0% expected. The data keeps pressure on the SARB to maintain its hawkish stance as policymakers seek to anchor inflation near the mid-point of its +3.0%-6.0% Y/Y target range.
• Local-currency bonds sold off after the release of South African CPI figures as participants revised their views on the SARB rate-hike outlook. Yields last sit 5.0-6.8bp higher across a flattened curve. South Africa's 1x4 FRA contracts have adjusted higher, touching new one-week highs.
• The aggregate BBG Commodity Index has shed ~0.2% this morning, while the precious metals index sits ~0.4% better off.