USD/ZAR scales one-week peak ahead of US, SA data

The USD/ZAR currency pair was a notch firmer on Monday, while trading near a 1-week high of 19.0686, as market players shift their focus to the US consumer inflation data and to speeches by a host of Federal Reserve officials.

At least 7 Fed representatives are scheduled to make speeches this week, following last week’s remarks that the US central bank wants more proof inflation will keep easing before interest rate cuts are introduced.

According to LSEG’s IRPR app, there is a 65% chance of a Fed rate cut at the bank’s May meeting.

Tuesday’s CPI inflation report may provide more clues over rate outlook. Annual consumer inflation probably slowed to 3% in January, according to market consensus, from 3.4% in December.

Annual core CPI inflation is expected to have decelerated to 3.8% in January from 3.9% in December – a 2 1/2-year low.

In addition, South Africa’s mining output will be a closely watched data print, with the official December figures expected at 9:30 GMT on Tuesday.

Mining production probably increased at an annual rate of 4.9% in December, according to market consensus, after a 6.8% surge in November. The latter has been the strongest growth in mining activity since July 2021.

South African markets disregarded President Cyril Ramaphosa’s State of the Nation Address last week, as he provided little detail about his plans to address challenges such as power cuts.

As of 9:26 GMT on Monday the USD/ZAR currency pair was edging up 0.11% to trade at 19.0352.