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Risk-On Fuels ZAR Rally Post-FOMC, Political Risks Eyed over Zuma

SOUTH AFRICA
  • USD/ZAR trades +0.12% higher this morning, tracking early price action in the BBDXY on the back of last night’s FOMC.
  • The cross fell sharply following yesterday’s announcement as risk conditions improved, despite the notably hawkish elements of the meeting – although these were pretty well-telegraphed in the lead-up.
  • As expected, the Fed doubled the pace of its taper with the dot plot alluding to 3 hikes in 2022 and upgrading its end-22 inflation forecast to 2.6% vs 2.2% prior.
  • ZAR was among the primary beneficiaries of risk-on post-meeting, Falling back below the 16.00 handle to form a large bearish engulfing candle on the daily chart.
  • The rejection of Zuma’s medical parole represents renewed political risks in SA and especially for Ramaphosa going into the holiday season.
  • However, no major plans for unrest have surfaced yet. This will be monitored closely going forward.
  • The cross should trade in line with global risk sentiment & USD-side developments today with locals away on holiday.
  • Next key support is at 15.8726 & Resistance at 16.089.
MNI London Bureau | +44 020-3983-7894 | murray.nichol@marketnews.com
BulletEM BulletEmerging Market NewsHomepage
MNI London Bureau | +44 020-3983-7894 | murray.nichol@marketnews.com
BulletEM BulletEmerging Market NewsHomepage

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