Daily Market Report 11 Apr

Daily Market Report – 11 Apr 2025

ZAR Eyes Rebound as Global Tailwinds Meet Local Uncertainty

Markets Wobble, But Hope Creeps Back In

After a week defined by volatility, we’re entering the weekend with a ZAR recovery bias, tempered by lingering political and fiscal concerns. Globally, the USD softens, yields retreat, and recession fears rise, giving the ZAR a reprieve. Locally, signs the ANC may drop the VAT hike offer hope that the GNU might just hold—but we’re not out of the woods.

ZAR Snapshot

  • Spot: 19.35
  • Range: 19.00 – 19.43
  • Resistance: 19.43
  • Support: 19.00

Technicals suggest a reversal may be underway. If GNU tensions ease and the ANC backs off the VAT increase, ZAR could stage a solid rally into next week, possibly testing 18.80 or below.

Key Catalysts: ZAR’s Tug-of-War

Bullish for ZAR:

  • Trump’s 90-day tariff pause.
  • Weaker USD amid falling yields.
  • Local calls from Parliament’s Budget Office against VAT hikes.
  • Signs of GNU repair talks over the weekend.

Bearish for ZAR:

  • Still no resolution to budget impasse.
  • SA manufacturing data signals structural decline.
  • Consumers dipping into retirement savings—demand-side red flags.
  • $16B+ outflows from EM debt markets this week (JPMorgan data).

GNU Dynamics: A Fork in the Road

  • DA finds validation from Parliament’s Budget Office opposing VAT hikes.
  • Manufacturing collapse (-3.2% y/y) increases pressure on ANC to pivot away from regressive tax policy.
  • If VAT hike is scrapped, expect a GNU revival narrative to gain traction.

If the DA-ANC dialogue leads to fiscal compromise, SA markets could rally sharply. If not, expect more risk premium priced into the ZAR and bond yields.

Bond Market Watch

SA bonds suffered a brutal week but may stabilize if the ZAR holds and political noise softens. Global yields have pulled back, offering a window for emerging market relief.

  • Fed funds futures now pricing in up to 4 rate cuts by year-end.
  • SA FRA market stabilizing, with the 3X6 FRA reflecting ~22bp in cuts.
  • Local bond auction performance next week will gauge investor confidence in fiscal direction.

Final Word: ZAR Setup Into the Weekend

This is a crossroads moment. The ZAR is undervalued, and technicals + global flows favor recovery. But that rebound hinges entirely on GNU politics. If ANC drops VAT and shows flexibility, we may see:

– ZAR < 19.00
– SAGB yields compress
– Renewed risk-on momentum

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