ZAR/USD Outlook:
ZAR/USD is slightly positive but likely to move sideways, currently trading above its 90-day average and recently reaching near the upper end of its 3-month range. The lack of a clear driving force suggests stability in the near term.
Key drivers:
• Rate gap: The South African Reserve Bank's recent interest rate cut contrasts with the U.S. Federal Reserve's tightening, widening the rate gap.
• Risk/commodities: Rising gold prices are supporting the rand, improving export earnings and attracting investment.
• One macro factor: Ongoing geopolitical tensions are driving demand for safe-haven assets, including the USD.
Range:
Expect ZAR/USD to hold steady within its recent 3-month range after its recent volatility.
What could change it:
• Upside risk: A stronger rebound in global commodity prices could boost the rand further.
• Downside risk: Heightened political instability in South Africa may erode confidence and pressure the rand.