Rand Treads Water Amid Conflicting Pressures, SAGB Auction On Tap

The rand has struggled to capitalise on broader greenback weakness over the past few days (USD/ZAR -0.2% vs BBDXY -0.6% this week) amid worrying signals on the performance of South Africa's grid and apprehension ahead of the SARB's final monetary policy decision of the year.

• Spot USD/ZAR trades at 18.3314, just shy of neutral levels, with familiar technical levels still in play. A move through the 18.00 mark would open up 17.9434, the 76.4% retracement of the Jul 27 - Oct 6 bull phase. Conversely, key short-term resistance has been defined at 18.8057, the Nov 10 high.
• Eskom ramped up loadshedding due to the forced shutdown of two generating units this morning and will now move between Stage 2 and Stage 3 power cuts until further notice. This comes after Electricity Minister Ramokgopa over the weekend admitted that the performance of the grid in the recent couple of weeks has been disappointing.
• Adding a potential source of concern for rand traders are geopolitical tensions around the Israel-Hamas conflict. South Africa's parliament will today vote on a motion to shutter the Israeli embassy as bilateral relations soured after the escalation of violence in the Middle East, which may spill over into Pretoria's relations with the US.
• The BER will release business confidence data at 10:00GMT/12:00SAST. Thereafter, the focus will turn to October CPI (Wednesday) and SARB rate decision (Thursday). Sell-side analysts polled by Bloomberg so far are unanimous in their call for an on-hold decision from the central bank.
• SAGB yields are lower across the curve ahead of the weekly auction in South Africa, with modest bullish impetus also seen in US Tsy space. RMB wrote that they "expect another strong auction in terms of demand," after the previous offering attracted the largest demand in more than two years, "especially considering how fee auctions are left for this year".