USD/ZAR Tests Near-Term Resistance Post-US Data

The latest upswing in greenback crosses, provoked by above-forecast US GDP print and the first decline in jobless claims in weeks, pushed USD/ZAR out of its earlier trading range. The pair now deals at 18.8330, around 1,770 pips on the session, with near-term resistance coming under pressure. Should the rate stage a sustained break above its 50-DMA (18.8254) and former trendline support (18.8657), bulls would look for a stronger upside move.

• South Africa's factory-gate inflation decelerated to +7.3% Y/Y in May from +8.6% prior, printing below the expected +7.5%. On a sequential basis, PPI inflation accelerated to +0.6% M/M from a standstill, in line with expectations. Nedbank commented that they "expect producer prices to moderate even further in the coming months," although "there is still a risk that inflation could recede at a slower-than-anticipated pace as the benefits of lower global prices will be partly contained by the weaker rand."
• SAGBs are now softer across the curve, with 10-year breakeven inflation rate ticking away from cyclical lows to last sit at 6.53%.