Rand Tops EMEA Pile as This Week’s Rally Extends

Strength in major equity benchmarks and lower UST yields have supported EM FX through the NY crossover (though CEE FX has lagged). The rand is among the most notable beneficiaries of the favourable sentiment toward risk currencies and is currently the top performer in the EMEA space. In addition to the above, gold has retained all of its gains from yesterday's notable ~1.3% rally and remains at its highest level since May. This may be providing an additional tailwind to the rand, with USDZAR down 0.35% on the day.

• Local currency strength comes despite Eskom having escalated loadshedding again. The utility company said it will alternate between Stage 5 and Stage 6 power cuts until Saturday morning, despite earlier assurances from government officials.
• From a technical perspective, a more sustained move lower in USDZAR could expose the short-term bear trigger at 18.1117, the Nov 15 low. Clearance of this level would strengthen a bearish threat and open 17.9434 next, the 76.4% retracement of the Jul 27 - Oct 6 bull phase.