South African Rand Stays Firm

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South African Rand Stays Firm

South African Rand Stays Firm As Dollar Slips Lower

As the greenback slipped after the NFP report, the South African Rand took this opportunity to show its strength. For now, the Rand is trading near 18.8125 with an upside of around 0.7% against the greenback.

Overall, the DXY lost 0.2% after the US BLS announced its NFP report, along with other metrics from the labor market.

While the Rand gains from dollar weakness, it appears to be totally ignoring the PMI data of South Africa. According to the data, a decline was seen in the manufacturing sector of South Africa, mainly from vehicle sales, which went down by 11.17%.

Sa Stock Market Down By 0.1%

Rand's price action is similar to that of other currencies from emerging markets. It depends on a mix of local economic indicators, greenback trends, and geopolitics.

And if we look at South Africa's stock market, a 0.1% decline was seen in the top-40 (blue chip) index. It appears that while the Rand has gained from the dollar's weakness, South Africa's stock market is taking its cues from Wall Street & other stock markets.

Furthermore, South Africa's government bond (2030) is currently trading near 10.63% with a gain of +1.5 bps. Despite the short-term gains seen in the government bond, the overall sentiment regarding them remains weak.

Looking ahead, the next week's direction bias will likely be neutral as a key economic release is up ahead. Next week, the US CPI is due once again, which will highlight the inflation situation during March.

If the CPI report further delays the rate cuts in the USA, it will mean that even the July meeting will not render any rate cuts at all. A scenario like this will be bullish for the USD and will send the Rand lower.

As for any forecasts about the CPI, it would be too soon for anything. Especially after the surprise of NFP, it makes sense to adopt a cautious approach as CPI can result in anything.

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