The DA and the ANC expressed optimism about reaching a budget agreement this week. This follows fears of the GNU collapsing over the weekend after the ANC initially rejected a DA proposal to jointly oversee economic policy within the GNU. A senior DA negotiator, cited by News24, revealed that the party had cautioned the ANC against advancing the 2025 National Budget without DA support, threatening to pull its backing entirely. In response, the ANC was reportedly exploring partnerships with other GNU members and external parties to muster the parliamentary majority required to approve the budget, which currently hangs in the balance.

However, the situation has improved significantly since, with News24 reporting that the ANC on Sunday agreed to many of the DA’s demands in exchange for approving the budget. These include sweeping spending reviews, the devolution of ports and rail authority, and the co-chairing of Operation Vulindlela in the Presidency. DA leader John Steenhuisen declined to provide more details but told the media, “We have moved a lot closer to a deal in the past 24 hours.

ZAR Markets

Market participants reacted swiftly to the deepening political tensions on Friday, with the USD-ZAR spiking nearly 1.30% towards 18.4000 after trading just above 18.1500 earlier in the day. However, the ZAR recovered sharply this morning following the news that the ANC and DA were close to reaching a deal that would see the budget passed and the DA enjoying more influence over economic policymaking. The ZAR bulls will be targeting 18.2000/$ today, with an eye on the 200-day moving average at 18.1305 thereafter.

Global FX Markets

The Japanese yen, a traditional safe-haven currency, strengthened on Monday, rising as much as 0.74% to USD/JPY148.735 and last trading at USD/JPY148.85 at the time of writing, driven by market fears over U.S. President Donald Trump’s upcoming tariff announcements. Gold also hit a record high of $3,112.14, marking three consecutive sessions of peaks, while the Swiss franc gained 0.3% to USD/CHF0.8775. Investors are anxious about new U.S. tariffs set to be detailed on Wednesday, which Trump indicated will target nearly all countries, potentially sparking inflation and slowing growth. This follows U.S. data showing higher-than-expected core inflation, raising stagflation concerns. As we enter the start of the EU session we have the USD Index marked at 103.84.