Daily Market Report – 8 Apr 2025

ZAR Finds Its Feet (Temporarily), Trade War Risk Still Escalates

Global Markets Stabilising, But ZAR Is Not Out of the Woods

After two bruising sessions where the ZAR lost nearly 5%, the local currency is finally showing signs of technical support around the R19.40 handle, finding temporary reprieve amid a broader recovery in Asian stocks and hopes of a US-Japan tariff truce.

The backdrop? Still toxic:

• Trump’s tariff barrage escalates, with China promising to “fight to the end.”
• US futures and Asian stocks rebound, but this could be a “dead cat bounce.”
• SA GNU in limbo, with Deputy President Mashatile warning that the DA’s fiscal stance may be “unsustainable” for coalition governance.

FX Focus – ZAR Teeters After Technical Bounce

• Spot: 19.40
• Range: 19.20 – 19.70
• Bias: Consolidation, but volatility still high

Technical Talk:

• Gravestone Doji on daily chart suggests the bullish USD-ZAR run may be overdone.
• Support at 19.23–19.04; Resistance at 19.67–19.70 (Fibo projections).
• Don’t call a bottom yet. This bounce looks more like position squaring than a shift in fundamentals.

The ZAR’s fate still hangs on 2 key pillars – whether SA stabilizes the GNU and whether global markets price in a ceasefire on the trade war front. Until then, this is consolidation, not a rally.

Bonds & Rates – Yields Surge as Uncertainty Peaks

• SAGBs 60-70bp wider week-on-week, highest yields since June/July 2024.
• Today’s vanilla bond auction (R2032, R2037, R2044) will be a sentiment check.
• Big questions: Will offshore buyers return at these high yields? Or is the GNU fracture too toxic?

While higher yields are attractive, the political premium baked into these levels reflects real investor fear over SA fiscal stability. The market is begging for coalition clarity and a functional revenue strategy.

Forward Rates (FRA) – Cuts are Back on the Menu

• • SARB still seen cutting two times this year (total 50bp), mirroring the global shift back to dovish amid recession fears.
  • Yield curve is steepening again – classic recession signal.

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