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ZAR: Rand Leads EMEA Peers, Extends Rebound Off Post-NFP Lows

ZAR
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USDZAR has extended the dip from Friday’s post-NFPs highs following the rand’s worst week since February. The strong payrolls number prompted broad-based weakness across the emerging markets space, though USDZAR ultimately ended Friday’s session close to flat.

  • ZAR outperformance relative to its EMEA peers today is noteworthy given weakness across both the equities and commodities spaces. Meanwhile, further signs of continued conflict in the Middle East has kept geopolitical tensions on edge.
  • More hawkish Fed rate pricing appears to be closing the door for an outsized SARB cut at its final meeting of the year, with the central bank likely to deliver on its cautious guidance. Indeed, South Africa’s 3x6 FRAs are trading at multi-week highs today, around 15bps higher compared to last week’s lows, with a 25bp cut at the November 21 meeting still fully priced in.
  • For USDZAR, last week’s gains are considered corrective from a technical point of view, given that 17.4193, the Jul 27 ‘23 low, has been breached recently. Sights therefore remain on the 17.00 handle next, while initial firm resistance is seen at 17.7423, the 50-day EMA.
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USDZAR has extended the dip from Friday’s post-NFPs highs following the rand’s worst week since February. The strong payrolls number prompted broad-based weakness across the emerging markets space, though USDZAR ultimately ended Friday’s session close to flat.

  • ZAR outperformance relative to its EMEA peers today is noteworthy given weakness across both the equities and commodities spaces. Meanwhile, further signs of continued conflict in the Middle East has kept geopolitical tensions on edge.
  • More hawkish Fed rate pricing appears to be closing the door for an outsized SARB cut at its final meeting of the year, with the central bank likely to deliver on its cautious guidance. Indeed, South Africa’s 3x6 FRAs are trading at multi-week highs today, around 15bps higher compared to last week’s lows, with a 25bp cut at the November 21 meeting still fully priced in.
  • For USDZAR, last week’s gains are considered corrective from a technical point of view, given that 17.4193, the Jul 27 ‘23 low, has been breached recently. Sights therefore remain on the 17.00 handle next, while initial firm resistance is seen at 17.7423, the 50-day EMA.