Rand Ticks Higher Still Ahead Of Elections & SARB MonPol Decision

Spot USD/ZAR edges lower for the third consecutive day as last week's corrective rebound ran out of steam. The pair last deals at 18.3372, around 250 pips lower on the session, with bears looking for losses past May 21 low/round figure of 18.0290/18.0000. Conversely, bulls keep an eye on the 50-EMA at 18.6020.

• SAGB yields sit marginally higher across the curve, with 10-year breakeven inflation rate last seen at 6.78%. The aggregate BBG Commodity Index has strengthened (+0.9%), with the precious metals subindex up 1.3% as we type.
• This week brings two major even risks for the rand, that is the national election (May 29) and the SARB rate decision (May 30).
  • The ruling ANC may lose its parliamentary majority but there is fundamental uncertainty around the gap to the 50% threshold and the probability of various post-election coalition scenarios.
  • The SARB is expected to keep interest rates unchanged as inflation is yet to return to the +4.5% Y/Y target mid-point while the central bank continues to reaffirm its hawkish credentials.