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USD/ZAR Falls Ahead of CPI, Analysts Bearish on ZAR in 2022

SOUTH AFRICA
  • USD/ZAR trades -0.19% lower this morning, tracking early selling pressure on the BBDXY.
  • The cross pulled back from its 100dma yesterday to close above the 15.50 handle after failing to breach the average.
  • ZAR has held up well since the start of Jan owing to a milder Omicron impact and improving terms of trade, but rising UST yields are starting to weigh on the risk proxy currency.
  • CPI continues to march closer to the topside of the SARB’s 3-6% target, driven mostly by external factors (oil/food prices) over domestic demand, necessitating another +25bp hike form the SARB next week to avoid falling behind the curve on normalization as the Fed eyes 4 hikes in 2022.
  • Growth remains weak in SA in 2022, with a wide output gap, narrowing terms of trade and a deteriorating current account surplus expected to weigh on ZAR this year.
  • From here, traders are likely to favour fading bouts of ZAR strength set against a backdrop of higher UST yields and softer global equities/risk sentiment.
  • Intraday Sup1: 15.4435, Sup2: 15.4031, Res1: 15.577, Res2: 15.6638
MNI London Bureau | +44 020-3983-7894 | murray.nichol@marketnews.com
BulletEM BulletEmerging Market NewsHomepage
MNI London Bureau | +44 020-3983-7894 | murray.nichol@marketnews.com
BulletEM BulletEmerging Market NewsHomepage

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