ZAR: Sharp Sell-Off in Metals Contributing to ZAR Underperformance

Renewed weakness for major equity indices through the NY crossover has kept the pressure on emerging market currencies. Combined with significant weakness in the commodities complex, the moves have resulted in a 1.85% rally for USD/ZAR today, which briefly traded above resistance at 18.6627, the Jul 2 high, earlier in the session.

• From a technical perspective, a clear break of this hurdle would undermine the recent bearish theme and signal scope for a climb towards 19.0054, the Jun 6 high and a key resistance.
• A near 7% sell-off in silver and 3% sell-off in gold account for rand underperformance compared to its EMEA peers, with both metals at their lowest since early May. Meanwhile, WTI futures briefly touched a 7-month low earlier today.
• South Africa's S&P Global PMI printed at 49.3 in June, little changed from the previous reading of 49.2. Accompanying commentary noted that "input price inflation [was] still at a much cooler pace compared to recent trends and output charges rising at the slowest rate in nearly four years."
• Note that the next SARB monetary policy meeting is scheduled for September 19, a day after the Fed's next meeting.