ZAR: Rand On Track To Finish Week As 2nd Best EMEA Performer

An extension of greenback losses (BBDXY -0.3%) and the dissipation of some negative risks for the rand have allowed USD/ZAR to edge lower this morning, with the pair last dealing at 17.7678, around 330 pips below neutral levels. Bears look for a move towards  Jul 28, 2023 low of 17.5713 and Jul 27, 2023 low of 17.4193. Conversely, bulls keep an eye on the 50-EMA intersecting at 18.0375. When this is being typed, the rand's weekly gain is the second largest in the EMEA FX space.

• Local assets could breathe a sigh of relief as the Democratic Alliance suggested that the adoption of the controversial education bill would not necessarily be an "existential threat" to the continuity of the current governing coalition.
• The dovish signal provided by yesterday's inflation expectations data has likely been priced in, removing a constraint for rand appreciation. Most expect the SARB to cut rates next week, with the 3-month JIBAR/1x4 FRA spread widening to -27.5bp.
• SAGB yields have inched lower this morning before finding support, with South Africa's 5-year and 10-year breakeven inflation rates last seen at 4.45% and 5.53% respectively. As a reminder, the National Treasury holds a linkers auction today.
• The composite BBG Commodity Index sits 0.4% higher on the session; the precious metals subindex has added 0.7%, narrowing in on multi-year highs.