28 September 2023
Support & Resistance Levels
Data This Week
ZAR gains in surprise move after stronger US GDP report.
Today’s Market & Resistance Levels
Data This Week
16H00 US NEW HOME SALES DATA 0.7MILLION EXPECTED
19H30 FED BOWMAN SPEAKS
01H50 BOJ MINUTES
14H30 US DURABLE GOODS ORDERS -0.5% MOM -5.2% PREVIOUS
11H30 SA PRODUCER INFLATION MOM 0.5% EXPECTED
11H30 SA PRODUCER INFLATION YOY 3.7% EXPECTED VS 2.7% YOY
14H30 US GDP GROWTH 2.1% EXPECTED QOQ VS 2% PREVIOUS
14H30 US INITIAL JOBLESS CLAIMS 215K VS 201K PREVIOUS
14H30 US PCE 3.5% EXPECTED VS 3.3% PREVIOUS
14H30 US CORE PCE 0.2% EXPECTED VS 0.2% PREVIOUS
ZAR traded weaker in early JHB trading before rebounding to session highs of 19.0700
The local unit initially benefiting from some Dollar profit taking and also stronger than expected SA PPI.
SA Producer inflation printing higher at 4.3% Vs 3.7 % expected YoY.
Traders speculating that we are already seeing the effects of a higher oil price in the data, but could force the SARB to act and once again raise rates.
Global yields continue to rise and the SA10YGB yields also spiking to above 11%.
- The moves are synonymous with global yields rising as investors exit government bonds on fears of rising interest rates.
This afternoon US GDP surprised markets to the upside and jobless claims also pointed out a strong labour market.
- A stop hunt saw the Dollar decline before sharply spiking as 10YT treasuries continue to drift higher.
- We expect the narrative to continue to support the Dollar at the expense of risk assets like stocks, EMFX and Gold.
A sustained break of the range and close above 19.1800.
- NB: for now we ‘ve breached the upper end of the range and continuation will push towards 19.4000.
Trade: BUY USDZAR on dips and go with break
-68 to 33,582
0 at 4,278
+29 to 14,637
Image: Trading Economics
ESA vs UAE vs GUPTAS
The South African government says a request by the United Arab Emirates (UAE) to resubmit an extradition application for the Gupta brothers is stalling the process.
Prosecuting authorities from both countries met in June to discuss the extradition of Rajesh and Atul Gupta.
This after the brothers were released earlier this year after a failed extradition bid by South Africa to bring the brothers back from the UAE.
Rajesh and Atul are facing allegations of looting billions of rand through state capture.
They were arrested in June last year by Dubai police after Interpol placed them on its most wanted list.
Justice ministry spokesperson, Chrispin Phiri, spoke to Mandy Wiener on the Midday Report earlier and gave an update on the matter.
SOLAR NATIONAL TREASURY
National Treasury has urged small businesses and households to apply for a loan scheme to help make the move to solar power easier.
Treasury launched the scheme last week and it is set to last until August 2024.
As part of government’s plan to mitigate the country’s power crisis, Treasury said the loan covered solar rooftops, batteries, inverters, and other installation-related costs.
The country’s power crisis was declared a national state of disaster in February, as the national grid was under severe pressure.
This compelled Eskom to implement stage six load shedding constantly.
To qualify for the loan, Treasury said small and medium enterprises (SMEs) needed to have a maximum income of R300 million.
Qualifying businesses can get up to R10 million as a loan to install solar panels.
Treasury said households were also encouraged to apply, as they could get up to R300,000 in a loan.
US stocks futures rose on Thursday, as investors carefully assessed a slew of economic data and pondered its potential implications for the Federal Reserve’s future monetary policy decisions.
Initial jobless claims rose by less than expected to 204 thousand last week, adding to signs of a strong jobs market, while second-quarter GDP growth was confirmed at 2.1%. On the other hand, corporate profits in the US rose by only 0.5%, which was less than initially thought.
Meanwhile, Treasury yields resumed the rally while the political deadlock concerning a deal to prevent a US government shutdown persisted.
Traders will closely monitor comments from Fed Chair Powell and other policymakers today for further clarity on what the Fed plans to do for the remained of the year.
Source: Trading Economics
The yield on the US 10-year Treasury note soared to 4.65%, the highest since July 2007.
Traders citing increasing concerns that interest rates will remain elevated for an extended period.
Initial jobless claims held close to the over-seven-month, defying expectations of a sharper increase.
Additionally, the final reading for the US GDP confirmed a sharp growth rate of 2.1% for the second quarter of the year.
Also pressuring US Treasury prices, the US national debt passed $33 trillion last week and the October 1st deadline is looming over the 2024 budget deal.
Stocks lower after more rate hike fears.
In Japan, the Nikkei 225 Index dropped 1.54% to close at 31,872, erasing gains from the previous session as surging oil prices and government bond yields dented risk sentiment.
Oil prices jumped to one-year highs amid tightening supplies, while the benchmark 10-year US yield hit its highest levels since 2007 on the back of a higher-for-longer interest rate scenario.
Meanwhile, Japanese Prime Minister Fumio Kishida instructed his cabinet on Wednesday to develop a new economic package by the end of October to alleviate the impact of inflation and support the economy through increased wages and investments.
Oil prices higher and pushing towards $100/bl.
Brent crude futures traded around $96 per barrel on Thursday, after rising to as high as $97.8 earlier in the session, the highest level in nearly a year as a sharp decline in US crude stockpiles exacerbated concerns about tight global supplies.
Official data showed that US crude inventories fell by 2.2 million barrels last week, much more than market expectations for a 320,000-barrel draw.
Crude stocks at the key Cushing, Oklahoma storage hub also dropped to the lowest level since July 2022.
The market has already been grappling with tightening global supply heading into winter as OPEC+ majors Saudi Arabia and Russia extended supply cuts through the year’s end.
The Russian government also said on Wednesday it is considering restricting grey fuel exports and raising fuel export duty for resellers.
Source: GULF news
Precious metals falling sharply.
Gold held below $1,880 an ounce on Thursday, hovering near its lowest levels in over six months, pressured by a strong dollar and rallying Treasury yields on the back of a higher-for-longer interest rate scenario.
The dollar jumped to ten-month highs against a basket of its peers while the benchmark 10-year US yield hit its highest levels since 2007.
Last week, the US Federal Reserve kept interest rates unchanged, but signalled another rate hike before the end of the year and fewer rate cuts than previously indicated next year.
Minneapolis Fed President Neel Kashkari also said on Tuesday there’s nearly a 50-50 chance that interest rates will need to move significantly higher to bring down inflation.
Dollar rally stalls.
The dollar index reversed early gains to fall to the 106.3 mark on Thursday but remained close to a 10-month peak of 106.839 touched on Wednesday.
Investors were digesting a batch of economic data and considering the potential impact on the Federal Reserve’s monetary policy trajectory.
Initial jobless claims rose by less than expected to 204 thousand last week, adding to signs of a strong job market, while second-quarter GDP growth was confirmed at 2.1%.
Subsequent comments from several Fed officials have also reinforced the notion that the central bank will need to hike rates further.
Investors will now turn their attention to Federal Reserve Chair Powell’s speech, which is scheduled for later today.