ZAR: Rand Consolidates Daily Gain into Weekly Close as ANC/DA Tensions Ease

More positive signs that an agreement between ANC and DA over the composition of the government of national unity (GNU) could be reached facilitated a recovery in the rand this morning.

• The ANC’s Secretary General posted on social media that discussions were “almost done”. Meanwhile, BofA strategists closed their bearish trade recommendation for the rand as they anticipate a coalition government will be formed.
• According to the Daily Maverick, the DA's Federal Executive said it will continue negotiations with the ANC about the composition of the GNU despite major differences over the allocation of Cabinet posts. Insiders said the party hoped to reach a conclusive agreement with the ANC before the end of the weekend.
• Most recently, News24 reported recently that “A crucial meeting between ANC President Cyril Ramaphosa and DA leader John Steenhuisen on Friday afternoon could see both parties finding each other after the government of national unity negotiations hit another brick wall this week.”
• Today’s sell-off reinforces the bearish technical theme for USDZAR. Recent weakness has resulted in a break of 18.0290, the May 21 low and a key support. The clear breach of this level strengthens a bearish theme and opens 17.4193, the July 27 2023 low. Initial resistance is at 18.4742, the 50-day EMA. A clear break would be seen as a positive short-term development.