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POLAND

A Benchmark Rate at 2% Would 'Not Be Excessive'

GILTS

Yield curve shifts higher with 5s30s flattening

EUROZONE ISSUANCE

Austria lowers 2021 funding target

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  • USD/ZAR trades +0.91% higher at the open, tracking the BBDXY and USD/CNH in early trading as mixed risk sentiment filters through from APAC.
  • The cross continued to drive higher on Friday, making a decisive break of the 50dma to move towards the 61.8% Fib (14.8864) of the 20 Aug-10Sept range. Price action remains bullish as we approach the SARB & FOMC this week, with ZAR among the most vulnerable in the high-beta space to rising UST yields.
  • The SARB is broadly expected to keep rates on hold this week, with inflation well contained within the target range. Although CPI is expected to tick up to 4.9% y/y in August, Gov Kganyago is likely to reiterate his focus on medium-term disinflationary vectors, which remain anchored around the midpoint of the 3-6% target range at 4.3-4.5%.
  • The FOMC will be the major focus in the aftermath of the SARB, with all eyes on the dot plot for signs of lift-off and the speed/frequency of hikes in 2024 which could precipitate additional volatility in the UST market.
  • The cross remains biased to the upside, but may get sticky around 14.88-15.08 – with ZAR fundamentals still relatively robust vs many others in the EM space.
  • Intraday Sup1: 14.7583, Sup2: 14.6577, Res1: 14.8864, Res2: 14.9781