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Morning NOTE

12 September 2022


The ZAR gained on the back of improved global risk sentiment.


  • The Rand gained more than 2% on the back of improved risk sentiment following a rally on wall street on Friday.
    • The local unit also gaining on the back of a EURUSD rally vs the Dollar, after Bundesbank chief Nagel said he expected the ECB to remain hawkish with another 75 bps expected in October.
    • The result a broad based sell of the Dollar in spite of elevated US yields. US 10YT at 3.34%
      • The ZAR and other EMFX gaining in this regard.
  • The risk for the week however remains US CPI data, although this session will likely see a stronger ZAR as weak Dollar longs are caught off guard and stop losses are hit.
  • The EURO trading as high as 1.0190 gaining 1.43% following the comments.
    • NB: the EU remains SA ‘s largest trading partner, explaining the high level of correlation between the ZAR and the EURO.
  • The highlight this week will be the  US inflation data out tomorrow.

Significant Market Data

  • Monday :
  • Tuesday :
    • 14h30  : US CPI EXPECTED 8.1% VS  PREVIOUS 8.5% YOY
    • 14h30  : US CPI CORE  EXPECTED 6.1% VS PREVIOUS 5.9% YOY
  • A softer print likely to support Risk assets and likewise a higher inflation print, supportive of the FED policy and we can see some more weakness.


  • This morning we opened STRONGER on the back of improved risk asset sentiment.
    • The local unit trading at a morning low of 17.1300, on the back of a rally in G7 currencies ahead of tomorrows US CPI .
      • Traders taking profits on “high” inflation bets.
  • The Dollar also on the back foot after Bundesbank president Nagel, said he expected the ECB to continue raising rates.
    • The Dollar index broadly lower at 108.43 , in spite of a US10YT trading at 3.34% ( at the time of writing ).
    • The Bundesbank (German central bank) statement highly supportive of the EURO as it closes the rate gap with the USA.
      • The ZAR likely to benefit.
  • NB: the risk remains tomorrows US CPI Data !

Expected Ranges

  • USDZAR :  Expect a range 17.0600-17.4200
    • Importers 17.1500-17.0600
    • Exporters 17.3300-17.4200
  • EURZAR :  Expect a range of 17.2600-17.5400
    • Importers 17.3500-17.2600
    • Exporters 17.4700-17.5400
  • GBPZAR :  Expect a range of 19.8700-20.2100
    • Importers 20.0000-19.8700
    • Exporters  20.1500-20.2100


  • USDZAR 17.2800
  • EURZAR 17.4300
  • GBPZAR 20.0800


  • A dam at South Africa’s abandoned Jagersfontein diamond mine collapsed early Sunday, triggering heavy flooding that damaged property and killed at least three people.
    • The Department of Mineral Resources and Energy said it has dispatched experts to investigate the cause of the dam burst. EWN
    • Residents have been evacuated, with reports of houses collapsing near the Charlesville area.
    • The mining dam burst its banks in in the Free State town earlier on Sunday – flooding parts of the town.
    • It is reported 3 people died and 4 were reported missing with 40 injured.
    • About nine houses were swept away and more than 20 damaged by flood waters after the dam wall of the historic mine collapsed.
  • Eskom said it would reduce its rolling power cuts schedule to stage 3 on Monday morning.
    • This comes after South Africans had to contend with stage four power cuts over the weekend.
    • The power utility said that sufficient progress had been made in recovering emergency generation reserves.
    • It also said it anticipated dam levels at pumped storage schemes would be fully replenished by Monday.
  • In an ongoing dispute, Copperleaf Golf and Country Estate in Centurion has labelled the City of Tshwane’s (CoT’s) claims that more than 600 homes in the estate were disconnected due to electricity non-payments and illegal connections as false.
    • City spokesperson Lindela Mashigo countered by stating that “the [revenue-collection campaign] campaign was successful” and that it was aimed at recovering accumulated debt of R16 million at Copperleaf. Money web


  • US stock futures rose on Monday as investors eyed key inflation data this week.
    • The data likely to provide more clues on the Fed’s rate hike path.
    • Last week, the major averages ended a 3-week losing streak last week, with the Dow climbing 2.66% on the period, while the S&P 500 and Nasdaq Composite gained 3.65% and 4.14%, respectively.
  • The US central bank is widely expected to deliver its third consecutive 75 basis point rate increase as the economy continues to grapple with sky-high inflation.
  • CPI due on Tuesday, allowing investors to assess before the Fed’s September policy meeting.


  • The US 10-year yield consolidated around 3.3%, not far from an over 10-year peak of 3.5% touched in June.
    • Investors reassessed the outlook for monetary policy as the Fed seeks to rein in soaring inflation by hiking interest rates further even as growth slows.
    • While the US economy is slowing and some industries such as housing show signs of weakness, the labour market has remained robust and quieted fears of a recession.
    • Markets continue to price a 70% chance of another supersized 75 basis-point interest rate hike in September.



  • The Dow  gained 377 to 32,151
  • The SP500 rallied 61 to 4,067
  • The Nasdaq gained 250 to 12,112


  • Asian markets trading higher across the region following a positive close on Wallstreet on Friday.
    • In Japan, the Nikkei 225 gained 1.1% to 28,500, hitting its highest levels in two weeks. Tech stocks leading the market higher as risk sentiment improved globally.
      • Investors also continued to track sharp moves in the yen as it tumbled to 24-year lows last week,
      • The move forcing Japanese authorities to state that they are ready to take necessary steps to counter excessive declines.
    • In Australia, the ASX 200 Index gained 1.02% to close at 6,965 on Monday. The index rising toward its highest levels in September on the back of gains in technology and mining stocks as risk sentiment improved globally.
      • Australian shares also tracked US stocks higher, as Wall Street snapped a three-week losing streak on Friday.  Reuters
  • Crude oil prices, lower at $86/bl after closing out a volatile trading week.
    • The theme remains concerns about a weakening demand outlook and a US-led plan to impose a price cap on Russian oil weighed on sentiment.
    • Prospects of a demand-sapping global economic slowdown continued to pressure oil prices, driven largely by aggressive monetary tightening by major central banks and top crude importer China’s Covid-19 curbs.
    • The G7 to recruit more countries to join their efforts in limiting Moscow’s energy revenues by imposing a ceiling on Russian oil prices.
    • Meanwhile, Russian President Vladimir Putin threatened to retaliate by halting all energy exports to Europe should a price cap push through.
    • Elsewhere, The UK, Germany and France voiced doubts about Tehran’s commitment to a new nuclear agreement, putting prospects for a boost in Iranian oil exports on hold. Gulf Energy news
  • Gold prices near $1,710/oz and pretty flat, ahead of Tuesday’s key US inflation reading, that could influence the Federal Reserve’s monetary tightening plans.
  • The US CPI due for release on Tuesday is expected to ease from 8.5% in July to 8.1% in August year-over-year.
    • A surprise to the upside could drive another decline in bullion prices as it would support even more aggressive rate hikes from the Fed.
    • Gold is now down nearly 20% from this year’s high and is trading less 3% above two-year lows,
    • Bullion lost its appeal as a hedge against inflation and economic uncertainties due to rising interest rates and a strong dollar.
    • Meanwhile, physical gold demand in key Asian markets remained firm last week as lower prices encouraged buyers, as reported by Reuters. Kitco metal
  • The US dollar declined to 108.40 on Monday, lower from 20-year highs.
    • The Dollar lower vs the Euro on the back of hawkish comments from Bundesbank President Joachim Nagel. He said the  ECB will need to continue raising interest rates if high inflation persists.
      • The policymakers reportedly prepared to deliver another 75 basis point rate hike in October.
      • Traders also preparing for US inflation reading that could influence the Federal Reserve’s rate hike plans.
    • The US CPI is expected to ease from 8.5% in July to 8.1% in August YOY, and a surprise to the upside could drive a fresh dollar rally as it would support further tightening from the Fed.
      • Safe-haven demand also provided a floor to the greenback, as the US economy has shown resilience at a time other major economies could be on the brink of recession. FX news
  • Copper, usually a reliable indicator of economic growth, especially in China, traded lower on Monday.
    • Prices lower to $3.55/lb vs $3.63/lb on Friday.
    • Investors gearing up  for US inflation data that could influence the Fed’s rate hike plans and affect the direction of global economic growth.
    • A stronger-than-expected US CPI data would support further monetary tightening from the US central bank, which could then dampen global demand and metals consumption.
  • Meanwhile, copper prices booked solid gains last week amid a rebound in risk sentiment and hopes for more policy support in top metals consumer China.
    • Various supply-side risks also supported prices, with workers at BHP’s mine in Chile, the world’s largest copper miner,
      • … currently negotiating with local regulators after threatening an all-out strike last week due to safety concerns. LME report

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