The ZAR weakened ahead of the D-day for the impeachment vote against President Cyril Ramaphosa.
- THE Rand weakened as investors sold Rands for Dollars ahead of today’s impeachment vote against SA President Cyril Ramaphosa.
- All 400 members of parliament are expected to vote on the matter, that will also be an open vote .
- The ANC unlikely to break rank and CR likely to survive the motion.
- The local unit also in Risk off mode ahead of today’s key US CPI REPORT.
- Markets are expecting a softer CPI report, that supports the FED’s view for a smaller hike tomorrow as well as smaller increases in 2023.
- The US10YT trade at 3.60%, higher, but the SP500 once again trading near to 4,000 and the Dollar continues to slide lower.
- We remain of the opinion that once the “RISK” of impeachment dissipates, the ZAR will strengthen and continue to track global yield movements.
Significant Market Data:
- 11h30 : SA MINING PRODUCTION OCTOBER YOY -2.3% EXPECTED VS -4.5% PREVIOUS
- 11h30 : SA GOLD PRODUCTION OCTOBER YOY -10.5% F/CAST VS -12.4% PREVIOUS
- 15H30 : US INFLATION NOVEMBER YOY 7.3% VS 7.7% PREVIOUS
- 15H30 : US CORE INFLATION NOVEMBER YOY 6.1% VS 6.3% PREVIOUS
- 10H00 : SA INFLATION YOY NOVEMBER 7.4% EXPECTED VS 7.6% PREVIOUS
- 10H00 : SA CORE INFLATION YOY NOVEMBER 5.1% EXPECTED VS 5% PREVIOUS
- 13H00 : SA RETAIL SALES -0.4% YOY OCTOBER VS -0.6% PREVIOUS
- 21H00 : US FED FOMC INTEREEST RATE DECSION +50 BPS EXPECTED ( Fed funds moves from 4% to 4.50% )
- 21H00 : US FED CHAIR : JEROME POWELL Q&A , WILL PAVE WAY FOR FUTURE RATE PATH AND PROJECTIONS.
- 11H30 : SA PPI NOVEMBER YOY 15.7% EXPECTED VS 16% PREVIOUS
- 15H15 : ECB INTEREST RATE DECISION +50 BPS EXPECTED : LENDING RATE FROM 1.5% TO 2%
- 15H30: US RETAIL SALES -0.2% EXPECTED VS 1.3% PREVIOUS\
- The Rand reached 17.6300 as traders cut long ZAR positions ahead of CR’s impeachment vote.
- ZAR traders ignoring global risk on sentiment after a rally in the SP500 and well as a drop in the Dollar.
- BUT, the US CPI report likely to confirm a slowdown in inflation in the world’s largest economy and this will also be ZAR supportive.
- Also, The FED votes tomorrow with 50 bps expected, AND all of this points to a healthy ZAR environment IF CYRIL SURVIVES THE VOTE.
- This morning we seeing some early profit taking as exporters take advantage of weaker ZAR levels,
- This likely to continue as we head into the session and await news on CR’s vote.
- Buying levels below 17.5000 for importers needing short term cover.
RISK EVENT : US CPI AND IMPEACHMENT PROCEEDINGS.
TRADE : SELL USDZAR ON RALLIES
- USDZAR : Expect a range 17.4400-17.6900
- Importers 17.5300-17.4400
- Exporters 17.6100-17.6900
- EURZAR : Expect a range of 18.3800-18.6800
- Importers 18.4800-18.3800
- Exporters 18.5800-18.6800
- GBPZAR : Expect a range of 21.4000-21.7300
- Importers 21.5100-21.4000
- Exporters 21.620-21.7300
- USDZAR 17.5800
- EURZAR 18.5600
- GBPZAR 21.6000
- The parliamentary year is set to end on arguably its most important business of the year on Tuesday whether or not President Cyril Ramaphosa should face impeachment.
- After a delay of a week, all 400 members of the National Assembly are set to congregate in Cape Town for the all-important vote.
- Never before has Parliament been faced with such decision.
- In addition, the Speaker of the House has once again rejected the ATM’s (African transformation movement) request to have a secret ballot. NEWS24
- The African National Congress (ANC) in Soweto said it believes that Zweli Mkhize was the only candidate that could unite the party.
- ANC Zone 5 chairperson Siyabonga Masiza said the party was in a fractured state as it’s in the grip of factionalism.
- Mkhize received 64 branch nominations in Gauteng, compared to 193 for Cyril Ramaphosa. EWN
- As Eskom loadshedding continues, Presidential hopefull Zweli Mkhize has called on the ANC to resist attempts to privatise the SOE.
- This after DA leader Steenhuisen, said the ANC was to blame for the problems at Eskom & not current CEO De Ruyter.
- Also, ESKOM said, citizens will have to brace for another day of stage 5 power cuts after Eskom ramped up load shedding at the weekend.
- The power utility is blaming an unusually high demand and the breakdown of generating units at its Hendrina, Kendal and Kriel power stations.
- Koeberg is also offline for routine maintenance. NEWS 24
- Also, Ramaphosa has stressed that his new energy plan of maintaining and bringing on new power to South Africa’s old, struggling grid doesn’t happen overnight.
- “It’s a process and I want South Africans to understand that we’ve got our hands on deck,” President Ramaphosa said.
- Ramaphosa was speaking on the sidelines of an African National Congress (ANC) event in Cape Town over the weekend,
- adding that those sabotaging Eskom were landing in handcuffs for the first time. EWN
- US stock futures held steady on Tuesday as investors prepared for a key US CPI report and the start of the Fed’s December policy meeting.
- Futures contracts tied to the three major indexes traded flat to slightly positive.
- On Monday, the Dow jumped 1.58%, the S&P 500 climbed 1.43% and the Nasdaq Composite added 1.26%, with all S&P sectors finishing in positive territory.
- The yield on the US 10-year increased 3.6%, ahead of the key US CPI release on Tuesday and the Fed’s final policy decision tomorrow.
- Consumer prices are expected to have slowed for the fifth straight month in November,
- It will be consistent with fresh data that showed consumer inflation expectations dropped to the lowest in 14 months.
- Evidence of slowing inflation drove money markets to price a 50bps rate hike by the Fed this week
- The Dow added 528 to 34,005
- The SP500 added 56 to 3,990
- The Nasdaq gained 139 to 11,0143
- Asian markets higher ahead of today’s US CPI and tomorrows Fed meeting.
- In Japan, the Nikkei 225 jumped 0.4% to close at 27,955, hitting their highest levels in over a week and tracking gains on Wall Street overnight, with nearly all sectors participating in the rally.
- but, investors remain cautious ahead of a key US CPI report that could influence the rates outlook, as well as the Federal Reserve’s policy decision on Wednesday.
- The US dollar traded around 105 on Tuesday, holding in a tight trading range as investors cautiously awaited a key US inflation report.
- Traders of the opinion it could influence the near-term outlook for interest rates, as well as the Federal Reserve’s policy decision on Wednesday.
- Money markets are currently pricing an almost 75% chance that the US central bank will hike rates by 50 basis points after delivering four successive 75 basis point rate increases.
- Still, investors see a loftier chance that the peak for the Fed funds will be higher than expected if inflation becomes entrenched. FX news
- Brent crude climbed toward $79 per barrel, after gaining more than 2% in the previous session, underpinned by an improving demand outlook from top crude importer China.
- This after its ambassador to the US said the country will relax Covid rules further and will welcome more international travellers in the “near future.”
- On the supply side, the market remains clueless on how long Canada’s TC Energy Corp would take to clean up the largest oil spill in US land in about a decade and restart the Keystone pipeline.
- In the USA WTI crude futures also climbed toward $74/bl on Tuesday after gaining more than 3% in the previous session,
- underpinned by an improving demand outlook from top crude importer China. Gulf Energy news
- Gold held near $1,780 an ounce in subdued trade on Tuesday after losing nearly 1% in the previous session,
- as investors braced for key US inflation data that could influence the near-term outlook for interest rates, as well as the Federal Reserve’s policy decision on Wednesday.
- Major central banks including the US FED, BOE, ECB and SNB all hiking rates this week likely to affect the future direction of bullion prices.
- Gold remains highly sensitive to the rates, as higher interest rates raise the opportunity cost of holding non-yielding bullion and dent its appeal, and vice versa. Kitco metals report