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USD/ZAR Summits 15.00 as 2021 FOMC Taper Timeline Sparks Risk-Off

SOUTH AFRICA
  • USD/ZAR trades +0.39% higher this morning, tracking early strength in the BBDXY following last night's FOMC minutes that bolstered global risk aversion (VIX +20.44% yesterday).
  • The cross has now breached the 15.00 handle after a few sessions of failed tests and focus will be on a close above the level to gauge potential for further upside towards 15.30-15.50.
  • Today's session will likely still be dominated by USD-side developments as markets digest the Fed's discussion of tapering within 2021 – creating scope for higher volatility in the near-term.
  • ZAR has been among the most affected by fluctuations in risk sentiment and will likely continue into next week – despite wider real yields/carry differentials as a result of yesterday's downside CPI surprise.
  • Early indications of local sentiment regarding the green paper on a state managed pension have been negative, with analysts understandably sceptical given Govt's poor track record in SOEs.
  • RSI momentum remains to the upside and short of the overbought mark at 64.85 with a bullish golden cross of the 50 & 200dma fast approaching.
  • Intraday Sup1: 14.0550, Sup2: 14.8632, Res1: 15.10, Res2: 15.2116
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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