ZAR: Rand Leading EMEA Peers as EUR Weakness Weighs on Wider Basket

Despite the relatively contained range for USDZAR, the rand is still the top performer in EMEA with the local currency relatively more insulated to broader euro weakness following this morning’s European PMI figures. Owing to the sharp pullback in the single currency, moves in EURZAR have been more stark compared to that of USDZAR. The cross traded as much as 1.2% lower this morning where it neared ~20-month lows printed earlier in the month.

• Despite the pullback from last week’s highs, a bullish theme in USDZAR remains intact from a technical standpoint. The pair remains comfortably above the 20- and 50-day EMAs, keeping sights on the 18.50 handle and 18.6850, the Aug 5 high. Initial firm support is seen at 17.9066, the 20-day EMA.
• The SARB delivered the widely expected 25bp cut to the repo rate in a unanimous decision at this month's meeting. However, the rhetoric that accompanied the decision turned somewhat more cautious, with Governor Kganyago pointing to a highly uncertain external environment and confirming that the MPC did not discuss a 50bp cut this time.
• Our full review of yesterday’s meeting can be found here.