AUD/ZAR Outlook:
The AUD/ZAR rate is currently above its recent average and near the upper end of its 3-month range. However, the geopolitical uncertainty is likely to keep the pair moving sideways.
Key drivers:
• Rate gap: The Reserve Bank of Australia’s potential rate adjustments contrast with the South African Reserve Bank's stable monetary policy, affecting investment flows.
• Risk/commodities: Higher oil prices generally hurt the Australian economy as a net energy importer, adding downward pressure on the AUD.
• One macro factor: Improvements in South Africa's fiscal situation and credit upgrades bolster investor confidence, positively influencing the ZAR.
Range:
The AUD/ZAR is likely to drift within its recent range, responding to external risk factors and local economic news.
What could change it:
• Upside risk: A significant rebound in risk appetite due to geopolitical stability could strengthen the AUD.
• Downside risk: Continued tensions and volatility in global markets could further weaken the AUD.