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USD/ZAR Bucks USD Weakness Slightly, Oversold Conditions Weigh

SOUTH AFRICA
  • USD/ZAR trades higher at the open, now back above 13.50 as the USD regains some bullish traction. USD/ZAR diverged slightly from the trend of USD weakness in yesterday's session as price action moves out of oversold territory on the daily.
  • Pressure is mounting on Ramaphosa to remove HealthMin Mkhize, that risks disrupting SA's vaccine rollout which has been decidedly slow with only 6,812 jabs administered in the past 24hrs.
  • Covid cases have fallen back into the 3k range from 5k, but seem to be slowly ticking up.
  • GDP will be the key focus today (exp at -3% y/y vs -4.1% prior & 3.2% QoQ vs 6.3% prior), with analysts seeing scope for an upside surprise on firm commodity prices.
  • An upside surprise would likely buoy ZAR & SAGB sentiment ahead of current acc and mining data on Thursday.
  • USD/ZAR is still pretty stretched below fair value at 14.50-15.00, with 13.40 the key hurdle to more downside.
  • Potential PBoC pressure on CNY appreciation is also a tail risk worth noting for ZAR going forward.
  • Intraday Sup1: 13.5111, Sup2: 13.4168, Res1: 13.6780, Res2: 13.7557
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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