Rand Still On Softer Footing Despite Optimistic Local Data

Spot USD/ZAR remains afloat despite trimming some of its earlier losses, with participants assessing positive data outturns released out of South Africa. The pair shot higher around 11:00BST/12:00SAST without any obvious headline catalysts, before easing off. When this is being typed, it trades at 18.8080, ~1,270 pips above neutral levels. Bulls continue to target 19.3301, the 76.4% retracement of the Jun 1 - Jul 27 sell-off.

• South Africa's PPI figures came in softer than forecast, with factory-gate inflation printing at +2.7% Y/Y in July versus +3.0% expected. The data reinforce the message sent by CPI data last week, providing further evidence of ongoing disinflation and reducing the odds of another SARB rate hike, as the local economy continues to struggle. However, following the release of PPI data, Nedbank wrote that "July’s figures are likely the bottom of the current cycle," while "the upside risk will emanate from the weaker rand."
• Elsewhere, South Africa's trade balance swung to a surplus of ZAR16.0bn in July from a deficit of ZAR4.7bn in June, even as economists in a Bloomberg poll expected a ZAR1.3bn deficit.
• Looking ahead, President Ramaphosa will tonight discuss the outcomes of the 15th BRICS Summit and the alleged transfer of weapons to Russia. The so-called "Russiagate" scandal initially triggered a sharp depreciation of the rand.