USD/ZAR gains as focus sets on presidential debate, CPI

The USD/ZAR currency pair was firmer on Tuesday after South African industrial data and ahead of the key US CPI inflation report that may affect the Fed’s interest rate cut trajectory.

Annual headline consumer inflation in the United States probably eased to 2.6% in August, according to market consensus, from 2.9% in July.

Annual core CPI inflation probably steadied at 3.2% in August, which has been the lowest rate since April 2021.

Markets are now pricing in about a 27% chance of a 50 basis point Fed rate cut in September and a 73% chance of a 25 basis point rate cut.

Also on investors’ radar will be the televised US presidential debate later on Tuesday, which could weigh on the outcome of the November election.

Meanwhile, in terms of other macro data, manufacturing production in South Africa was reported to have risen 1.7% year-on-year in July, outpacing market consensus, and following two consecutive months of contraction.

As of 13:12 GMT on Tuesday the USD/ZAR currency pair was edging up 0.42% to trade at 17.8988.