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Sell-Side Flips Bullish on USD/ZAR, Domestic Virus Situation Deteriorates

SOUTH AFRICA
  • USD/ZAR trades a fraction higher at the open, mirroring price action in the BBDXY and USD/CNH.
  • The cross managed to hold below 14.30 in yesterday's session, having pulled away from 14.40 resistance.
  • However, with the virus situation now spiralling, markets are turning increasingly bearish on ZAR's prospects, given its relatively overvalued position vs other EMs.
  • Officials are set to discuss a move to level 5 restrictions for Gauteng today, and tighter measures for the Western Cape which is just a few weeks behind Gauteng in terms of caseload.
  • Little news on the Magahsule front ahead of his court case vs the ANC (Thurs-Fri), but may pick up in the next few days.
  • Sell-side has flipped bullish on USD/ZAR at these levels, looking for a more comprehensive move higher on the back of upside pressure in US Treasury yields.
  • Intraday Sup1: 14.1536, Sup2: 14.0765, Res1: 14.3833. Res2: 14.5198
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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