Morning Wrap

The ZAR reached its weakest level of  R18.7700/$ after the Dollar surge continued.

The Dollar rally continued after US yields reached 4.18% on the back of Fed monetary policy concerns and Treasury issuances.

• The benchmark US10YT yield is higher on the back of:

1. Stronger economic data supporting a Fed hike.
2. Fitch downgrade of Us debt forcing yields higher.
3. Treasury issuances of $103bn next week.
4. The risk of Non-farm payrolls this afternoon.  

• We expect the ZAR weakness to continue, but advise caution ahead of today’s NFP report.
  • Traders likely to book some profits and a ZAR pullback (stronger) should not be unexpected.
  • Technically a break of 18.5600 targets, opens up 18.4000 and a retest of 18.7800 opens up 19.1500.
     
• Trade :  BUY USDZAR on DIPS