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ZAR: USD/ZAR Continues To Operate In Close Proximity Of 19.0

ZAR
EM BulletBulletEmerging Market News

The 19.0 figure capped gains in USD/ZAR yesterday and continues to keep a lid on price action. The pair last changes hands at 18.9714, over 400 pips above neutral levels. A break above 19.0 and Jun 6 high of 19.0054 would support the bullish case. Bears continued to look for a pullback towards Jan 6 low of 18.4323.

  • Commerzbank wrote that "the South African rand has lost around 8.5 per cent of its value against the US dollar since the beginning of October, giving up most of its gains since the formation of the new government." In their view, "after an initial phase of euphoria and some good first steps, the new Grand Coalition in South Africa is finding it increasingly difficult to move up a gear. Moreover, it seems that the reforms that have been initiated so far have improved sentiment, but not yet the hard data." They noted that while reforms take time to generate effects, the FX market "sometimes lacks (...) patience," even if in the long term reforms will likely support the rand.
  • SAGB yields have crept higher across the curve amid upticks in US Tsy yields. South Africa's 10-year breakeven inflation rate has climbed to 5.63%, the highest point since Nov 6.
  • The aggregate BBG Commodity Index has added 0.9% amid an extension of yesterday's upswing. The precious metals subindex is 0.5% better off.
  • President Ramaphosa's "January 8 Statement" will be eyed tomorrow as the leader will outline the ANC's priorities for the year ahead.
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The 19.0 figure capped gains in USD/ZAR yesterday and continues to keep a lid on price action. The pair last changes hands at 18.9714, over 400 pips above neutral levels. A break above 19.0 and Jun 6 high of 19.0054 would support the bullish case. Bears continued to look for a pullback towards Jan 6 low of 18.4323.

  • Commerzbank wrote that "the South African rand has lost around 8.5 per cent of its value against the US dollar since the beginning of October, giving up most of its gains since the formation of the new government." In their view, "after an initial phase of euphoria and some good first steps, the new Grand Coalition in South Africa is finding it increasingly difficult to move up a gear. Moreover, it seems that the reforms that have been initiated so far have improved sentiment, but not yet the hard data." They noted that while reforms take time to generate effects, the FX market "sometimes lacks (...) patience," even if in the long term reforms will likely support the rand.
  • SAGB yields have crept higher across the curve amid upticks in US Tsy yields. South Africa's 10-year breakeven inflation rate has climbed to 5.63%, the highest point since Nov 6.
  • The aggregate BBG Commodity Index has added 0.9% amid an extension of yesterday's upswing. The precious metals subindex is 0.5% better off.
  • President Ramaphosa's "January 8 Statement" will be eyed tomorrow as the leader will outline the ANC's priorities for the year ahead.