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ZAR Eyes SARB Hold for Support, But Retail Sales May Disappoint

SOUTH AFRICA
  • USD/ZAR pauses for breath at 14.8685 as USD/CNY tentatively breaks its multi-session downtrend as headlines regarding China's hopes for improved US relations and threats of action, should its interest be undermined come across the wires.
  • Focus today on the SARB, expected to hold in what is pegged to be a true nail-biter with more dovish factors entering the SARB's value function.
  • Our base case, however, expects significant hawkish rhetoric from the SARB, fiscal risks from the Feb budget and a forward-looking approach to inflation to win out on the day - resulting in a hold.
  • Reinforced carry should continue to augment ZAR optimism in the hunt for yield.
  • Weaker retail sales data may dampen hopes for a more robust 4Q20 recovery exp at -2.6% YoY & 1.0% MoM.
  • Intraday Sup1: 14.8211, Sup2: 14.7093, Res1: 14.9137, Res2: 15.00
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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