ZAR: Rand Edges Higher But Depreciation Theme Remains In Play
USD/ZAR trades at 18.8105, around 300 pips lower on the session, but the short-term uptrend remains intact. A retreat past Dec 12 low of 17.6191 would give bears some initial reprieve. On the flip side, bulls look for a break and consolidation above the 19.0 figure after it got pierced amid thin liquidity a couple of days back.
- Local headline flow remains rather thin during the Christmas/New Year period, with ongoing riots in neighbouring Mozambique flagged as a source of concern.
- SAGB yields are slightly lower across the curve, with South Africa's 10-year breakeven inflation rate last seen at 5.38%.
- The composite BBG Commodity Index sits a tad lower; the precious metals subindex operates 0.5% shy of neutral levels.
Want to read more?
Find more articles and bullets on these widgets:
Historical bullets
JPY: Close at Current Levels Would Erase Election Rally
USD/JPY's sell-off extends into a second session with today's pullback low at 151.43 marking a break below the 200-dma of Y152.00 and, more significantly, the 50-day EMA of 151.56. A close at current or lower levels confirms a reversal of the election-triggered rally, with Trump's tariff threats a key driver on top of the building expectation for a BoJ rate hike at the December meeting (OIS-markets see a 25bps hike near 65% priced). This week's price action also shows well that USD/JPY can shrug off US equity strength, should risk-off be pervasive elsewhere (particularly via European stock markets).
- Tomorrow's Tokyo CPI for Nov (published three weeks before the national print) is seen rising further, but it's the Dec 12 Tankan survey that will likely be a greater determinant for the Dec 19 decision. USD/JPY vols are bid to accompany spot weakness, with 1m (capturing the Dec BoJ, as well as Fed decision) topping 12 points for the first time in two weeks today.
- Recall month-end flows (likely front-loaded this week due to the Thanksgiving market holidays across Thursday & Friday) pointed to USD sales to rebalance against a surging US equity market, which will be adding to the downside pressure.
- Worth noting the heavy supply weighing on JPY over the past two sessions, with both yesterday's session and today's trade so far well ahead of average volumes for currency futures. Today's cumulative activity sits over 30% ahead of average for this time of day.
EGB OPTIONS: RXG5 135.50/132.50 Put Spread Given
RXG5 135.50/132.50 put spread 2.5K given at 101/100.5.
EURIBOR OPTIONS: Latest Option trades
- ERH5 98.00/98.12/98.25c fly, sold at 1.25 in 10k.
- ERZ5 98.125/98.50/98.875c fly, bought for 0.75 in 2.25k.
