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Risk-Off Sends USD/ZAR Back Above its 100dma, SARB Likely to Hike +25bp

SOUTH AFRICA
  • USD/ZAR trades +0.40% higher this morning, tracking early price action in the BBDXY following last night’s hawkish Fed meeting.
  • Powell signalled an upcoming hike in March and alluded to plans to significantly reduce the balance sheet – sparking broad-based risk-off.
  • UST yields spikes and equities reversed sharply, contributing to notably weaker global risk sentiment today.
  • Post-Fed price action should dominate today, alongside the SARB meeting.
  • A broad consensus for a +25bp hike has emerged as the SARB continues with its gradual normalization as a late hiker.
  • Focus will be on upside inflation revisions and downside growth revisions as exogenous factors continues to drive price dynamics higher.
  • The outcome is largely priced in (1x4 FRA-Jiba3m: +30bp), and may see some marginal ZAR weakness following the print – but more attention will be given to inflation projections and forward guidance.
  • Large fuel price hikes in Feb do not bode well for the inflation outlook that is expected to peak in Dec-Feb.
  • USD/ZAR price action has jumped above the 100dma and remains vulnerable to global risk sentiment and USD strength.
  • Intraday Sup1: 15.3015, Sup2: 15.2660, Res1: 15.4435, Res2: 15.5230
MNI London Bureau | +44 020-3983-7894 | murray.nichol@marketnews.com
MNI London Bureau | +44 020-3983-7894 | murray.nichol@marketnews.com

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