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SOUTH AFRICA: USD/ZAR Rallies Off Multi-Month Low, Cabinet Names Awaited

SOUTH AFRICA

USDZAR has extended the sharp recovery off Friday’s multi-month low of 17.8689, with the pair almost 2% higher compared to that level and up 1.4% on the session, as frictions between GNU partners during cabinet discussions add to rand headwinds.

  • Despite today’s bounce, initial resistance for USDZAR remains some way off at 18.5119, the 50-day EMA, while a break of the June highs near 19.00 would be needed to signal a reversal of the overall bearish trend conditions.
  • Markets continue to wait for President Cyril Ramaphosa to announce the cabinet lineup of his government of national unity. Reports this morning indicated that the brinkmanship of the ANC and DA led to the temporary collapse of cabinet talks, while News24 have noted that talks are on a knife-edge. Investors may fear that by including more parties into its coalition, the ANC risks diluting the influence of the business-friendly DA.

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