The ZAR lost ground against the Dollar reaching R19/$ in early trading, on the back of a Risk off Asian session.
Market Movement Today:
The ZAR breached R19/$ handle after US producer inflation printed higher than expected, setting off another Dollar rally.
US treasury yields spiking higher to reach 4.17% on the combination of renewed Fed hawkishness and also continued Treasury issuances.
Last week, both US CPI and PPI were above previous rates BUT markets continue to price a 70% likelihood that the FED will pause.
However, hawkish statements from Fed officials drove investors to consider that interest rates will remain at a restrictive level for a prolonged period of time.
The result a rebound Us yields and the Dollar and the Rand selling off accordingly.
Technically, the previous high of R19.1500/$ remains a key level and a break opens up R19.90/$
We except the ZAR to weaken in the current environment.