USD/ZAR Dips Below 19.00 Following Q4 GDP Data

The rand has extended this week’s gains, up 0.45% against the dollar, with USDZAR below the 19.00 handle for the first time since Feb 22 when the finance minister delivered the 2024 budget speech.

• GDP rose a lower-than-expected 0.1% Q/Q (Est: +0.2%) in Q4-2023, with the economy narrowly avoiding a technical recession. While the overall growth outlook remains bleak, recent downside momentum in USDZAR has coincided with the release of the figures.
• Yields on SAGBs have also dipped since the release of the data, easing off earlier intraday highs but still up 2-4bps across the curve. Nevertheless, ranges on 10y bonds remain contained within this week’s ranges. Note that the South Africa’s 10y yield premium over the US touched its highest level in around 2 months just ahead of the data.
• For USDZAR, a bullish technical outlook remains intact with the current pullback considered corrective, for now. The clearance of resistance at 19.2180, the Jan 22 high, confirmed a resumption of the uptrend and signals scope for a climb towards 19.6399, the Oct 06 2023 high. On the downside, key support has been defined at 18.7622, the Feb 21 low.