USD/ZAR: Rand heads for best month since November

Key points

The South African Rand looked set to register its best monthly performance since November 2022 ahead of South African trade balance report for June.

The report, due out at 12:00 GMT, is expected to reveal a ZAR 11.85 billion trade surplus.

In May, South Africa reported a trade surplus of ZAR 10.2 billion, well above market expectations, as exports grew 12.3% month-over-month and imports increased 8.7% from a month ago.

Separate data by the South African Reserve Bank showed on Monday that private sector credit had expanded 6.25% YoY in June, following a 6.85% surge in May.

Meanwhile, the US Dollar Index was looking at an over 1.1% monthly loss amid expectations that the Federal Reserve’s policy tightening cycle could be over following July’s rate hike.

“We suspect that further signs of a significant easing in the monthly core CPI (consumer price index) numbers for July and August will ultimately persuade the Fed to hold fire for the remainder of this year particularly,” Capital Economics wrote in an investor note.

The DXY was little changed at 101.725.

As of 9:20 GMT on Monday USD/ZAR was edging up 0.49% to trade at 17.6848. Last week, the exotic Forex pair went down as low as 17.4176. The latter has been the pair’s weakest level since February 3rd (17.0211).

USD/ZAR was set for a 6.02% monthly decline.