ZAR: Rand Shows Muted Reaction To Below-Forecast CPI Data , SAGB Yields Dip

Spot USD/ZAR snapped its ten-day losing streak yesterday and extends its move away from recent cyclical lows today, even as below-forecast South African CPI data has had modest (if any) impact on price action. The rate last deals at 17.8232, marginally above neutral levels, with bulls looking for a move through the 50-EMA at 18.2379. Conversely, bears keep an eye on 17.4193, the Jul 27, 2023 low.

• South Africa's headline inflation cooled to +4.6% Y/Y in July from +5.1% prior, missing the consensus forecast of +4.8%. Core inflation fell to +4.3% Y/Y, despite expectations that it would stay at +4.5%. The central bank looks to anchor both metrics at the +4.5% Y/Y mid-point of the official target range.
• SAGB yields bull steepened in reaction to the release of South African CPI data, with the short end outperforming by a comfortable margin. South African FRAs fell across the board, with 1x4 contracts last sitting 29bp below 3-month JIBAR, as the data cemented expectations that the SARB could cut rates as soon as next month.
• After the release of domestic data, the focus turns to FOMC meeting minutes and Fedspeak trickling through from the Jackson Hole symposium, due to the knock-on effects of Fed policy on SARB decisions.
• The aggregate BBG Commodity Index sits marginally above neutral levels; the precious metals subindex is 0.1% weaker.