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Rand Slips On PPI Data, SARB Rate Decision Takes Centre Stage From Here

ZAR

Spot USD/ZAR stabilises after shedding 1.60% on the eve of the SARB monetary policy review, with the central bank governor due to start the press briefing at 15:00 local time/13:00 GMT. The consensus view is that the central bank will raise the repo rate by 75bp after the release of better than forecast CPI data yesterday.

  • The rate has moved away from session lows (ZAR16.9073) around the release of South African PPI figures for October, which outpaced the move in the BBDXY index. Factory-gate price growth slowed to +16.0% Y/Y from +16.3% in September.
  • South Africa 10-year breakeven inflation rate remains in retreat, plunging to a new cyclical low of 6.01% this morning. Further decline below 5.95% would see the rate sitting at worst levels since late February.
  • The FTSE/JSE Africa Top40 Index confirmed the formation of a bull flag pattern and continues to creep higher. The index last operates ~0.4% above neutral levels, closing in on multi-month highs printed last week.
  • At the time of typing, USD/ZAR trades at ZAR16.9751, marginally higher on the day. Technically, bulls look for a break above trendline support-turned-resistance at ZAR17.2820, which would clear the way to Nov 17 high of ZAR17.5553. Bears see Aug 26 low of ZAR16.7158 as their initial target.

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