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USD/ZAR Eases Off Session Highs Despite Continued Commodity Weakness

ZAR

The pullback in USD/ZAR from its session highs (ZAR17.46) has outpaced the parallel move in the BBDXY index. The pair last trades ~0.8% off its best levels, while the gauge of broader greenback strength sits just ~0.1% below today's peak.

  • USD/ZAR last deals at ZAR17.33, a touch higher on the session. In the grand scheme of things, the rate continues to look for clear directionality after falling below trendline support drawn off Apr 13 cyclical low.
  • The commodity complex has offered little in the way of outright support to the ZAR. The aggregate BBG Commodity Index holds its opening losses, with precious metals and industrial metals subindices both weaker on the day.
  • South Africa's 10-year breakeven inflation rate dropped to new three-month lows and last sits just above there at 6.20%. All eyes are on Wednesday's CPI data, due just ahead of the SARB's monetary policy decision on Thursday.
  • Consensus looks for a 75bp increase to the key policy rate at the SARB's final meeting of the year this week.

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