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ZAR: Rand Remains Under Pressure Following MPR, USDZAR Targets 50-Day EMA

ZAR
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The rand remains under pressure following the release of the SARB’s Monetary Policy Report. Weakness in major equity indices on the back of the disappointing ASML earnings report (seemingly released ahead of schedule) may be providing an additional headwind to the rand, which is once again the poorest performing currency in EMEA. Ongoing weakness in the commodities space and a pullback across onshore China equity markets have underpinned ZAR underperformance today, albeit spot gold is moderately firmer on the session.

  • In South Africa, the MPR offered few surprises, with the central bank continuing to sound increasingly confident on the outlook for inflation and growth. However, it noted that “Policy is still moderately restrictive,” and “While disinflation is on track, uncertainty remains.” There was little in the way of updated guidance on rates, with the document stressing the importance of incoming data.
  • From a technical standpoint, the recovery in USDZAR off the late September lows is still deemed corrective. A clear break of the 50-day EMA, at 17.6927, would instead highlight a stronger reversal of the broader bearish picture. The 17.00 handle is still in focus on the downside.
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The rand remains under pressure following the release of the SARB’s Monetary Policy Report. Weakness in major equity indices on the back of the disappointing ASML earnings report (seemingly released ahead of schedule) may be providing an additional headwind to the rand, which is once again the poorest performing currency in EMEA. Ongoing weakness in the commodities space and a pullback across onshore China equity markets have underpinned ZAR underperformance today, albeit spot gold is moderately firmer on the session.

  • In South Africa, the MPR offered few surprises, with the central bank continuing to sound increasingly confident on the outlook for inflation and growth. However, it noted that “Policy is still moderately restrictive,” and “While disinflation is on track, uncertainty remains.” There was little in the way of updated guidance on rates, with the document stressing the importance of incoming data.
  • From a technical standpoint, the recovery in USDZAR off the late September lows is still deemed corrective. A clear break of the 50-day EMA, at 17.6927, would instead highlight a stronger reversal of the broader bearish picture. The 17.00 handle is still in focus on the downside.