ZAR: Positive Risk Sentiment Supports Rand, USD/ZAR Breaches Key Support

South African rand, a bellwether of risk sentiment in EM FX space, has rallied this morning amid relatively heavy losses for the greenback. The BBDXY Index has shed 0.5%, testing its 50-DMA, after US President Trump told Fox News that he would "rather not" have to impose tariffs on China, which was interpreted as an olive branch.

• Spot USD/ZAR staged a convincing break of key support from Jan 6 low/50-DMA at 18.4323/18.3925, which represents a bearish juncture. The rate last deals at 18.3200, around 1,850 pips shy of neutral levels, with bears looking for a dip through the 200-DMA at 18.1522. Conversely, bulls look for a rebound towards Jan 13 high of 19.2296.
• The composite BBG Commodity Index sits less than 0.1% lower on the day, with the precious metals subindex up 0.6%. Gold changes hands ~$16.4/oz. higher on the day.
• SAGB yields have faltered across the curve and remain at/near session lows. South Africa's 5-year and 10-year breakeven inflation rates have dipped to 4.22% and 5.34% respectively. The National Treasury holds a linkers auction today.
• Reminder that the SARB will convene for its first monetary policy meeting of 2025 next week, with a rate decision expected on Thursday.