Rand Ticks Higher, National Election Underway

Spot USD/ZAR is losing altitude for the fourth consecutive day, with overnight implied volatility soaring to the highest levels since the outbreak of the COVID-19 pandemic. This reflects a sense of nervousness as South African voters head to polling stations for a national election, in which the ruling African National Congress may lose its parliamentary majority.

• The SARB's next rate decision, due tomorrow, provides another highlight of an action-packed local calendar. The central bank is expected to leave interest rates unchanged as its rhetoric has set the bar for monetary easing relatively high. While recent inflation data provided evidence of cooling price pressures, key indices are yet to return to the SARB's preferred levels.
• When this is being typed, USD/ZAR trades at 18.2693, a touch lower on the day. Bears look for a move towards May 21 low/round figure of 18.0290/18.0000. Conversely, topside focus falls on the 50-EMA at 18.5866.
• The commodity complex is slightly firmer but precious metals trade on a marginally softer footing, with gold last seen ~$8.4/oz. below neutral levels.
• Local financial markets are closed for the Election Day, which is a public holiday in South Africa.