Rand Under Pressure From Stronger Greenback, Geopolitical Worries

Spot USD/ZAR snapped a four-day losing streak yesterday after printing a new cyclical low at 18.1581. The rand came under pressure as Fitch cast doubt on South Africa's ability to meet the ambitious fiscal targets of the recent MTBPS amid particular challenges related to wage control. The pair has turned bid this morning amid wider greenback outperformance and last sits at 18.3654, ~730 pips better off, with bulls eyeing Oct 26 high of 19.2710 for initial resistance. Bears set their sights on the 18.00 mark.

• The rand is facing some additional pressure from renewed geopolitical concerns as South Africa's stance on the Gaza situation provides a potential fresh source of tensions with the West, on top of the recent stand-off surrounding Russia's invasion of Ukraine.
• The BBG Commodity Index has sunk, shedding 1.1% this morning. The precious metals subindex sits 1.0% lower on the session.
• SAGB yields are higher across the curve, with 10-year breakeven inflation rate last seen at 6.78%.
• ABSA pushed back their forecast of the start of the SARB's rate-cutting cycle to July. They had previously pencilled it in for March.