AUD/ZAR Outlook: Slightly positive, but likely to move sideways, as the rate remains above its recent average and near its mid-range while lacking a clear driver.
Key drivers:
• Rate gap: The Reserve Bank of Australia's expected interest rate hike offers support to the Australian dollar, while the South African Reserve Bank's recent rate cut adds pressure on the rand.
• Risk/commodities: The Australian dollar benefits from its ties to commodity prices, despite a recent decline in metals, whereas the rand has gained strength from rising gold prices.
• One macro factor: Inflation pressures in Australia have risen, leading to speculation about tighter monetary policy by the RBA, contrasting with South Africa's lower inflation and interest rate reduction.
Range: The AUD/ZAR is likely to drift within its recent range, influenced by ongoing commodity price fluctuations and economic data releases.
What could change it:
• Upside risk: A hawkish signal from the RBA following a rate hike could strengthen the AUD further.
• Downside risk: A significant drop in global commodity prices or adverse economic data from Australia could weaken the AUD against the rand.
