ZAR: USDZAR Extends Rally, National Unity Government Looking Increasingly Likely

USDZAR is trading at a fresh session high, up 1.2% as topside pressure on the pair retains momentum following the ANC press conference. An ANC official stated that "At this point in time the conversation is looking at a government of national unity," corroborating a proposal which had been outlined earlier in an IOL report.

• With MK seemingly not involved in talks at present, this could see President Cyril Ramaphosa retain his position. Ramaphosa's ouster likely an essential condition for the party led by former President Jacob Zuma.
• For USDZAR, the pair is now above last week’s high, narrowing the gap to the next resistance point of note at 19.0659, a retracement level. The more stable equity and commodity backdrop has offered the rand no reprieve, with the local currency among the poorest performing globally.
• Yields on local bonds stand 5-15bps higher across the curve, while the JALSH index is flat on the session. 1-month ahead USDZAR implied vols remain close to recent highs, at around 15.76% today.