ZAR: Looming Tariff Deadline, SARB Rate Decision In Focus
Spot USD/ZAR has breached the psychologically significant 18.0 figure and trades at 18.0630, around 650 pips higher on the day. There are signs that a double-bottom pattern might be forming after the pair broke above Jul 11 high of 17.9763 and bulls look for a confirmation of the emerging uptrend, eyeing gains beyond Jun 23 high of 18.1631. Meanwhile, bears look for a pullback and erasure of recent gains, setting their sights on the area around the 17.5 mark, which limited the downside this month.
- SARB Governor Lesetja Kganyago will announce the latest monetary policy decision during a press conference starting at 14:00BST/15:00CEST. The central bank is expected to deliver a 25bp cut - see our preview for more details.
- US tariffs are scheduled to take effect at midnight and there has been no indication of any breakthrough in trade talks with South Africa as of yet.
- SAGB yields have crept higher, even as US counterparts sit below neutral levels. South Africa's 5-year breakeven inflation rate has inched higher to 3.78%, with the 10-year rate last seen at 4.70%.
- The composite BBG Commodity Index has shed 1.6%, but the precious metals subindex is only down by 0.3%. Gold trades ~$35.0/oz. higher on the day.
- South Africa will report June PPI (10:30BST/11:30SAST) and trade balance (13:00BST/14:00SAST) later today.
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EGB FUNDING UPDATE: Ireland will hold one auction in Q3 (in September)
- The NTMA has announced it will hold one auction in the quarter on Thursday 11 September (with details to be announced on Monday 8 September).
- There is no statement here as to whether we will see further auctions in Q4 or not.
GILT AUCTION RESULTS: 1.50% Jul-53 Green
| 1.50% Jul-53 Green Gilt | Previous | |
| Amount | GBP2.00bln | GBP2.00bln |
| Avg yield | 5.169% | 4.976% |
| Bid-to-cover | 3.20x | 3.20x |
| Tail | 0.8bp | 0.3bp |
| Avg price | 45.953 | 47.369 |
| Low price | 45.885 | 47.342 |
| Pre-auction mid | 45.924 | 47.332 |
| Previous date | 05-Feb-25 |
JAPAN: Far-Right Sanseito Rising In Polls Ahead Of Upper House Elections
The far-right populist Sanseito ('Vote Party', DIY) has risen to a new high in the latest Kyodo News opinion poll, coming in joint-third place on the party list vote with 11% support. This excluded non-voters and undecided, who accounted for 45% of the total. If they were included, DIY's support would come in at 5.8%, above the 3.4% achieved in the 2024 general election. The ultranationalist, anti-immigration, anti-COVID restrictions party has recorded a boost in recent opinion polling after a strong performance in the 22 June Tokyo metropolitan election.
- Kyodo News reports, "Amid growing discontent with economic malaise and record-breaking numbers of inbound tourists, Sanseito supporters complain that foreigners receive better treatment than Japanese and the country's culture is changing rapidly. A movement with roots in social media, supporters blend nationalism with a sense of crisis and frustration over their daily lives."
- The party advocates changing the Japanese Constitution to allow for the establishment of a permanent standing army, while also removing the presence of US forces on Japanese territory. It performs well with younger Japanese voters, capitalising on anger with cost-of-living issues.
- The party aims to win six of the 124 House of Councillors seats available in the upcoming election (it currently holds one).
- If the governing conservative Liberal Democratic Party-Komeito coalition loses its majority in the upper house, it would likely seek alliances with other centre-right parties rather than Sanseito. Nevertheless, rising support for an avowedly nationalist party could see the LDP look to ape its policies to win back support.
