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USDZAR Returns to Flat After Testing Last Week’s Highs Overnight

ZAR
Overnight price action put USDZAR at an intraday high of 19.0771, and within close proximity of last week’s highs, before the pair shed almost 1% to touch its overnight lows - moves coincided with MTN headlines, as the SA-based firm agree to sell its fintech stake to Mastercard (which MTN values at $5.2bln). The pair has since partially pared some of its losses, with the downtick in the greenback and spike higher in e-mini S&P struggling to provide headwind to the pair.
  • The rand lags its EM peers, which have been benefiting from the more favourable risk conditions seen at the start of the European session. At the time of typing, USDZAR trades a marginal 0.03% in the red while ZAR sits close to the bottom of the EMEA pile.
  • Recent gains that started from the Jul 27 low of 17.4193 have resulted in a break of both the 20- and 50-day EMAs, highlighting potential for a stronger corrective cycle. Note too that a trendline resistance drawn from the Jun 1 high, has also been cleared. The break opens 19.1533 next, the Jul 7 high. First support lies at 18.5133, the 20-day EMA.
  • Electricity minister Ramokgopa spoke over the weekend, highlighting the consistent improvement in Eskom capacity which, in conjunction with warmer weather, will mean lower levels of load-shedding ahead.
  • Looking ahead to the remainder of the week, unemployment rate (Est: 32.8%) and retail sales data (Est: +0.2% y/y) are on the docket.
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