Fed's Tighter Tone and the Rand

It's been interesting to watch the market's reaction to the latest Fed minutes. The tone was decidedly less dovish than some were hoping, which, predictably, put a bit of a damper on risk-on sentiment. For those of us eyeing emerging market currencies, it's a bit of a head-scratcher. You'd expect a stronger dollar narrative to weigh more heavily, but $USDZAR is still bouncing around 16.75, showing a surprising degree of resilience today after its dip yesterday.

I'm still keeping a close watch on that 16.85 level for $USDZAR. If the rand can hold its ground and even firm up a bit against a hawkish Fed, it might suggest some underlying strength or perhaps just a very crowded short dollar trade getting unwound. Definitely makes you wonder if there's more to the story than just rate differentials.