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Rand Tad Weaker, Participants Weigh CPI Data Against SARB Speak


Spot USD/ZAR trades at ZAR18.3512, up ~350 pips on the session, consolidating losses registered during a sharp sell-off in the first half of the month. The 20-EMA provides the initial layer of resistance at ZAR18.6796. Conversely, bears look for losses towards the ZAR18.00 figure.

  • South Africa's headline inflation slowed more than forecast to +6.3% Y/Y in May from +6.8% prior, while core inflation remained relatively sticky and came in at +5.2% Y/Y (prev. +5.3%), matching expectations. The data provoked slight downward adjustment to the local FRA curve.
  • Speaking later in the day, SARB Governor Lesetja Kganyago said that rate hikes are needed to contain inflation, despite their consequences for economic activity. At the same time, he expressed optimism on the prospects for removing South Africa from the FATF's gray list and on SA-US trade relations.
  • The composite BBG Commodity Index has shed ~0.4% today, with the precious metals subindex down ~0.6% at typing.
  • SAGBs have turned bid this morning, with 10-year breakeven inflation rate edging lower to 6.79% today.

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