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Pullback Considered Corrective


Holding Above Recent Lows


BLOCK, Large 3Y Midcurve Put Condor

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  • USD/ZAR drifts higher at the open moving past 14.70 in early trading on the back of a firmer BBDXY.
  • Price action in the cross remains bullish after establishing a firm base around 14.40 will the sell-side eyeing 15.00 on the back of recent damage done by socio-political unrest.
  • Focus for today remains on domestic CPI, expected to moderate to 4.8% y/y in headline and remains flat and low in core at 3.1%.
  • Here a higher print may spark a marginally hawkish reaction from the market, but nothing materially concerning, while a lower of flat print may see some hawkish positioning priced out of the market.
  • Tentative market expectations for a reactive +25bp hike in rates at tomorrow's meeting seem largely disconnected with the reality of the situation – with the SARB unlikely to tighten amid an acutely vulnerable labour market, faltering growth and mostly manageable inflation.
  • Expectations for a sharp rise in Covid cases/deaths in the coming weeks may also dampen ZAR sentiment in the near-term.
  • Intraday Sup1: 14.6577, Sup2: 14.5753, Res1: 14.7583, Res2: 14.7898