ZAR: USD/ZAR Extends Corrective Bounce Following Q2 GDP

The risk-off theme across markets has resulted in a solid uptick in USDZAR, which stands 0.8% higher on the session and 2% higher compared to Monday’s lows. Weakness in the commodities complex (Bloomberg Commodities Index -0.8%) is likely exacerbating losses for the rand, which is the weakest performer in EMEA again today.

• Meanwhile, GDP growth on a quarter-on-quarter basis came in a touch below expectations at +0.4% (Est: +0.5%), but the positive print nevertheless means South Africa avoids falling into a technical recession. The year-on-year figure was in-line with expectations at +0.3%.
• For USDZAR, trend conditions remain bearish following the significant sell-off in August, with recent gains considered corrective. A break above 18.0579, the Aug 22 high, would disrupt the sequence of lower-highs and lower-lows, potentially bolstering the pair's recovery.
• A rebound in the Japanese yen during Tuesday trade, combined with rand underperformance, has led to a notable 1.4% decline in ZARJPY. However, that cross still sits above Friday’s lows.