06 October 2023
Support & Resistance Levels
Data This Week
ZAR reaching weakest level since June 2023, breaching 19.5000 in early JHB trading.
Today’s Market & Resistance Levels
Data This Week
14h00 ATLANTA FED Raphael Bostic speaks
16h00 US JOLTS JOB OPENINGS 8.8M EXPECTED
09H15 SA GLOBAL PMI 50.3 EXPECTED
10H00 ECB’S LAGARDE SPEAKS
11H00 EU RETAIL SALES -0.3% MOM
11H00 EU PPI 0.6% MOM EXPECTED
14H15 US ADP EMPLOYMENT DATA +153K EXPECTED
16H00 US ISM SERVICES PMI 53.6 EXPECTED
14H30 US WEEKLY JOBLESS CLAIMS +210K EXPECTED
14H30 US NON FARM PAYROLLS +163K EXPECTED
14H30 US UNEMPPLOYMENT 3.7% EXPECTED
The ZAR traded stronger ahead of this afternoon’s key NFP report
he local unit trading at 19.3500 as traders seen liquidating long Dollar positions ahead of the Jobs data.
This in contrasts to 24 hours ago , where investors sold ZAR after the SARB reiterated their policy was to ensure inflation is under control and not the futile attempt to affect the ZAR.
- Longer term, the theme remains higher yields and this likely to keep risk assets (like the ZAR) under pressure.
We eagerly await today’s US NFP report at 14h30 today.
- Payrolls likely to be affected by the on-going UAW strike.
- Thus US nonfarm payrolls likely increased by 170K last month, down from 187K in August.
- It would be the fourth consecutive month with job gains falling below the 200K mark (Includes the Auto workers strike).
We remain in a highly volatile session and this likely to continue until 14h30 today.
- If payrolls surprise to the upside expect another “negative session for risk” I.E. WEAKER ZAR.
- Higher NFP ~ ADD TO LONGS WITH A BREAK ABOVE 19.5800 (ASIA HIGH).
If payrolls surprise to the downside expect a reversal “positive session for risk” I.E. STRONGER ZAR.
- Lower NFP ~ EXIT LONGS WITH A BREAK BELOW 19.4200 (Wednesday HIGH).
BUY USDZAR on dips (we are above 19.3000) Target 19.5000-19.8000
-10 to 33,119
-5 at 4,258
-16 to 14,760
Image: Trading Economics
Stage 2 load shedding indefinitely from Friday as 4 generation units go offline.
As a result of the loss of four generation units and the need to replenish reserves in preparation for the week ahead.
Stage 2 load shedding will be implemented from 05:00 on Friday until further notice, Eskom said on Thursday night.
It will communicate any further changes if necessary.
MINING UNDER PRESSURE
Anglo Platinum CEO sees no immediate rebound in low metal prices.
“I really hope I am wrong, but the way I am setting up the business is that those prices are in place for a bit of time” said Craig Miller, CEO.
Anglo American Platinum, the world’s biggest platinum miner by value, said the low metal prices that companies in SA are currently grappling with could be sustained for a period of time.
He attributed it to a slowdown in China’s economic growth.
Prices for platinum-group metals, which have declined rapidly over recent months, could remain depressed, Craig Miller, CEO of the Johannesburg-based producer, told Reuters.
US stock futures steadied on Friday as investors braced for the September jobs report that could influence the interest rate outlook.
Analysts expect the economy to have added fewer jobs in September compared to August, and a softer-than-expected reading will likely drive bond yields lower and support equities.
In regular trading on Thursday, the Dow shed 0.03%, the S&P 500 lost 0.13% and the Nasdaq fell 0.12%.
Those losses came as investors digested data showing initial jobless claims once again came in below forecasts at 207K, remaining close to 7-month lows and pointing to a resilient labour market.
Still, the benchmark indexes recouped most of Thursday’s intraday losses, as a pullback in Treasury yields gave equities a much needed reprieve.
Source: Trading Economics
The yield on the US 10-year Treasury note eased to the 4.7% mark from the 16-year high of 4.8% this week.
Markets awaited Friday’s jobs report for the latest insights on the US labour market.
The yield on the 10-year note remained nearly 15bps higher in October while that on the 30-year bond hovered close to 5%.
Labour market tightness and strong growth during periods of high inflation drove markets to agree that neutral interest rates have shifted considerably higher since the 2008 recession.
It makes today’s jobs report all the more important.
Additionally, services and manufacturing ISM PMIs both backed optimism on economic performance.
Fed policymakers Bowman and Mester flagged the possibility of another rate hike this year, while Bostic warned that the funds rate will need to remain at the terminal level for longer.
Stocks flat lining ahead of NFP.
In Japan the Nikkei 225 fell 0.26% to close at 30,995, taking cues from a weak lead on Wall Street as investors braced for a key US monthly jobs report that could influence the Federal Reserve’s next policy steps.
The Nikkei also dropped 2.7% this week for their third consecutive weekly decline.
Those moves came as global bond yields surged to multi-year highs during the period, putting downward pressure on equities.
Notable losses were seen from index heavyweights such as Mitsubishi UFJ (-1.3%), Tokyo Electron (-1.6%), Toyota Motor (-0.7%).
Oil prices finding support.
Brent crude futures rose to around $84.5/bl on Friday but were still set to lose more than 8% this week.
Traders citing weakening global demand outlook outweighed concerns about tight supply.
On Wednesday, EIA data showed that US gasoline stocks rose the most since the first week of 2022, and the four-week average for US gasoline demand reached its lowest point for this time of the year since 1998.
Oil prices were also pressured by news that Russia was considering lifting its diesel ban in the coming days.
Moreover, analysts suggested that demand destruction has possibly begun in tandem with a slowdown in seasonal travel.
Source: GULF news
Precious metals under pressure.
Gold steadied above $1,820/oz on Friday as investors braced for nonfarm payrolls data which is expected to show that the US economy added fewer jobs in September compared to August.
Bullion prices also found support recently from a pullback in the dollar and Treasury yields after ADP data showed that private job growth in the US totalled 89,000 in September.
It was the least since January 2021 and well below the 153,000 expected by analysts.
However, the metal is still set to decline for the second straight week and remains close to its lowest levels in 7 months.
This amid concerns that the US Federal Reserve will keep interest rates elevated for an extended period due to inflationary risks
Dollar lower ahead of NFP report.
The dollar index was subdued around 106.4 on Friday as investors prepared for a key US monthly jobs report that could influence the interest rate outlook.
The nonfarm payrolls report due later today is expected to show the economy to have added fewer jobs in September compared to August.
The ongoing UAW strike , and thus an even softer-than-expected reading will likely drive the dollar and bond yields lower.
The greenback also lost nearly 1% over the past two sessions, retreating from ten-month highs and tracking a decline in Treasury yields