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Morning NOTE

15 September 2022


The ZAR continues to trade near the weaker end of its recent range, with a break of 17.5000 a possibility.


  • The Rand continues to test the 17.5000 level, with a break targeting 17.8000 over the medium term.
  • The local unit briefly gained to 17.3500, following softer US PPI data and better than expected SA retail sales.
    • Earlier, SA retail sales grew 8.6% YOY earlier in July of 2022, after a downwardly revised 2.3 percent fall in the previous month.
      • It was also better than market forecasts of an 8.4 %. It was the steepest rise in retail activity since June of 2021.
    • However, once the US session opened, the focus returned to Fed rate hikes with 75bps and now whispers of 100 bps making the rounds.
      • Fed fund futures pricing in 100bps at 30%, given the Fed’s insistence of 2% inflation, markets are nervously aware of the latter.
  • All eyes now turn to next week key Central bank meetings

    On Wednesday , we have the US FOMC rates decision at 20h00 and this is followed by Powell’s Q&A at 20h30.

    Then on Thursday we the SARB MPC rates decision at 15h00 SA time.

    • These events are absolutely major and we are once again likely to see volatility spike, in terms of the Decision as well as the follow up statements.
      • Traders will once again focus on the language that Powell uses.
  • The SARB  will raise its key interest rate by 75 basis points next week to halt inflation,
    • This was on the back of Reuters poll found, adding another 25 basis points in each of the following two quarters before pausing for the rest of 2023.
    • A majority of economists (12 of 20) in a September 7-14 poll, predicted another 75 basis points to 6.25% at its September 22 meeting following a similar move in July.
    • The remaining eight expected a smaller half-point move. Moneyweb

Significant Market Data




  • This morning we CONTINUE  to open WEAKER with continued tests of the 17.5000 level a warning sign.
  • ZAR bears firmly in the driving seat as it tries to test weaker levels close to R18/$.
  • The market likely to increase Dollar longs ahead of next week FOMC meeting.
  • For any ZAR recovery we require the SARB to at least match the FED, else the ZAR could trade to levels last seen in the pandemic.
  • NB: the Fed drives global liquidity and this will continue to determine the local unit’s fate.

    Trade : BUY USDZAR ON DIPS OR A BREAK OF 17.5000

Expected Ranges

  • USDZAR :  Expect a range 17.3900-17.6000
    • Importers 17.4400 – 17.3900
    • Exporters 17.5600 – 17.6000
  • EURZAR :  Expect a range of 17.2300-17.5400
    • Importers 17.3900 – 17.2300
    • Exporters 17.4500 – 17.5400
  • GBPZAR :  Expect a range of 19.9800-20.2500
    • Importers 20.0700 – 19.9800
    • Exporters  20.1900 – 20.2500


  • USDZAR 17.4200
  • EURZAR 17.3800
  • GBPZAR 20.0400


  • Former Chief Justice Sandile Ngcobo will lead an independent panel to consider whether President Cyril Ramaphosa should face an impeachment inquiry.
    • Speaker Nosiviwe Mapisa-Nqakula announced on Wednesday night that Ngcobo,
      • along with former Gauteng division judge, Thokozile Masipa,
      • and University of Cape Town law professor, Richard Calland,
    • will consider the evidence related to an alleged cover-up of a robbery on the president’s farm.
    • This is a major blow to Ramaphosa who decided to remain silent on the matter.  EWN
  • Ramaphosa  said a programme to assist the residents of Jagersfontein in the Free State would take guidance from the government’s successes during COVID-19.
    • Ramaphosa visited the area on Monday after a dam wall collapsed at a local mine and destroyed several homes and farmland in the Charlesville area. EWN
  • A potential investor for the grounded low-cost airline Mango has been found but remains a mystery.
    • The Department of Public Enterprises told Parliament’s portfolio committee on Wednesday it was still waiting for a deal to be put on the table.
    • But SAA chairman John Lamola sounded a warning about the viability of restarting the airline if the business rescue process continued to drag on. Money web.


  • The Dow Jones and the S&P 500 erased slight gains from earlier in the session to hover below the flatline on Wednesday.
    • The losses on the back of the higher-than-expected inflation reading.
    • The data raised concerns that the Fed may further accelerate its rate-hiking path.
  • A hot inflation reading raised prospects of an even more aggressive stance from the Federal Reserve,
    • with Fed funds futures now placing a 30% likelihood of a full percentage point hike.
  • A softer than expected US PPI REPORT, soothing fragile market nerves.


  • The US 10-year Treasury yield consolidated above 3.4%, after a hotter-than-expected CPI report reinforced market bets on more hikes.
    • The US annual inflation rate eased to 8.3% in August from 8.5% in July, less than markets had expected, while the monthly figure went up 0.1%, against expectations of a 0.1% decrease.
  • The US central bank is widely expected to deliver its third straight 75 basis point rate hike at the September 20-21 policy meeting.


  • The Dow  30 to 31,135
  • The SP500 added 13 points to 3,946
  • The Nasdaq gained 86 to 11,719


  • Asian markets tracking Wall Street higher, with largely smaller gains across the region.
    • In Japan, the Nikkei 225 rose 0.2% to around 27,870, as Japanese shares sought stability after selling off in the previous session on higher-than-expected US inflation numbers.
      • Investors now await the Fed next week with 75 bps and risk of 100 bps (30% priced into the markets).
      • Earlier markets also digested data showing Japan’s trade balance posted a larger-than-expected deficit in August as imports surged on high energy costs and a weaker yen.
      • The data highlighting the country’s fragile economic recovery and vulnerability to external price pressures.
    • In Australia, the ASX 200 Index rose 0.4% to 6,856 recovering from its worst one-day drop in the previous session on higher-than-expected US inflation numbers.
      • Energy stocks led the charge on higher oil prices,
        • while financial shares also pushed the index higher, with the “Big Four” banks gaining between 0.4% to 1.7%. Reuters
  • Brent crude oil bounced back above $95 per barrel as investors continued to assess the outlook for global demand.
    • The International Energy Agency’s (IEA) latest report indicated a large-scale gas-to-oil switching in many countries,
      • calculated to average 700,000 barrels per day from October 2022 to March 2023, double the amount vs 2021.
    • However, the IEA, based in Paris France,  pointed out that growth in global oil consumption is forecasted to weaken in the last quarter of 2022.
    • as an economic slowdown intensifies but sees demand picking up strongly in 2023. Gulf news
  • Gold prices traded around $1,700/oz recovering from previous session losses.
    • The yellow metal recovering after a pull back in the Dollar following, the high CPI in the previous session.
    • On Tuesday, a sharp dollar rally on the back of higher-than-expected US CPI numbers fuelled expectations.
    • In Europe, investors are betting that the European Central Bank will continue to raise borrowing costs sharply after the central bank delivered a historic 75 bps rate hike earlier this month.
    • While gold is considered a hedge against inflation and economic uncertainties, higher interest rates raise the opportunity cost of holding non-yielding bullion, denting its appeal. Kitco
  • The US dollar bounced sharply to approach 110 after the latest CPI report showed inflation eased less than expected in August.
    • The inflation print strengthening the case for the 3rd straight 75bps rate hike by the US central bank next week.
      • The US annual inflation rate eased to 8.3% in August from 8.5% in July.
      • This was however above market expectations of 8.1% while the core CPI also surprised to the upside with 6.3% .
    • The most pronounced selling activity was against the Japanese yen, which crossed again 144, the lowest since July 1998 AND
    • The Euro crossed parity AGAIN to trade at 0.9968, the pound was also approaching a 37-year low at 1.1491. FX news

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