ZAR: Rand Falters Along Precious Metals

Broader gains for the greenback push USD/ZAR higher this morning, allowing the pair to break out of its weekly range. The next key resistance has been defined at 18.6627 and a move beyond there would suggest that bullish momentum is accelerating. Bears look for a renewed sell-off towards Jun 21 low of 17.8689. When this is being typed, spot USD/ZAR trades at 18.3448, around 860 pips lower on the day.

• The SARB left the repo rate unchanged at the record-high level of 8.25%. The outcome was widely expected (albeit for the first time in months there were some dissenting calls), while the 4-2 vote split provided marginal dovish surprise, as the median forecast in a survey conducted by Bloomberg was 5-1. Governor Kganyago again tipped hat to improving inflation outlook, which played into the view that rate cuts are drawing nearer.
• President Ramaphosa used his inaugural policy speech after re-election to outline plans for infrastructure investments and poverty reduction. At the same time, the leader noted that his cabinet is committed "to steadily reducing the cost of servicing our debt."
• The composite BBG Commodity Index sits 0.7% lower on the day after printing fresh cyclical lows. The precious metals subindex is 1.7% worse off, with gold trading ~$25.6/oz. lower on the session.
• SAGB yields have ticked higher across the curve, with South Africa's 10-year breakeven inflation rate has inched higher to 5.84%.