The USD/ZAR currency pair hovered above a fresh low of 16.3025, its weakest level since August 15th 2022, as the greenback was weighed down by dovish remarks by a key Federal Reserve official, which bolstered investor rate cut expectations.
Meanwhile, the Rand continued its advance, underpinned by rising price of Gold. South Africa is a major producer and exporter of the yellow metal.
Yesterday Minneapolis Fed President Neel Kashkari said that inflation was slowly cooling, but there was a risk the unemployment rate could “pop” higher. This would add to prospects of an interest rate cut.
Market focus now sets on the US data string, including ADP employment figures, job openings as well as Friday’s Non-Farm Payrolls report for December, which may provide more clues on the health of the economy and the Fed’s monetary policy trajectory.
Last month, FOMC policy makers had signaled just one 25 bps rate cut for 2026, while investors continue to expect two or three rate cuts of 25 basis points each.
The USD/ZAR currency pair was last up 0.11% on the day to trade at 16.3755.
The Rand seemed to have ignored weak local PMI data, which showed South Africa’s private sector had contracted at the sharpest rate since January in December.
The S&P Global South Africa PMI came in at a reading of 47.7 in December, down from 49.0 in November. Business activity shrank markedly amid weaker customer demand and challenging economic conditions.
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