Key points:

• The US dollar is on track for a fourth weekly gain, bolstered by US-China trade war de-escalation, but remains overvalued. Pressure continues to mount on the Fed to pause Quantitative Tightening and cut rates, though Trump’s debt-heavy tax-cut proposals may raise Treasury yields, delaying USD correction.

• ZAR’s undervaluation narrows as April’s GNU-driven sell-off unwinds. Investor confidence grows with expected GNU budget support and SARB’s planned inflation target reduction, signalling tighter policy in the short term.

• US-China trade talks in Switzerland led to tariff reductions (China: 125% to 10%, US: 145% to 30%) for 90 days, boosting risk appetite. Ramaphosa’s upcoming Trump meeting highlights strains in SA-US ties over geopolitical and policy differences.