USD/ZAR Outlook:
Bearish, as the rate is below its recent average and near recent lows, pressured by strong commodity demand supporting the rand.
Key drivers:
• Rate gap: The Federal Reserve's dovish approach, with steady interest rates, contrasts with the South African Reserve Bank's commitment to high interest rates.
• Risk/commodities: Strong demand for South Africa's key exports, particularly gold and platinum, has bolstered the rand while maintaining pressure on the dollar.
• One macro factor: Recent reductions in U.S. asset attractiveness due to geopolitical tensions have prompted investors to seek alternatives, further weakening the dollar.
Range:
The USD/ZAR is likely to drift within its recent range, showing volatility but remaining below the average.
What could change it:
• Upside risk: A surprising rise in U.S. job figures could boost the dollar.
• Downside risk: Continued strength in global commodity prices may further strengthen the rand.
