View this email in your browser

Morning NOTE

2 September 2022


The ZAR weakened to reached 17.3200 vs the Dollar as traders continue to exercise caution ahead of today’s key NFP report.


  • The Rand continued to lose ground against the Dollar on the back of risk aversion ahead of today’s jobs report.

    • The losses were however limited as stocks (SP500), staged a recovery on the back of short -covering ahead of the data release.
    • After last month’s report shocked the markets (+528k vs 280k expected), traders adopting a more cautious approach.
    • Markets expecting +300k .
  •   WHY so much attention to the NFP report ?
    • Recap : The US Federal Reserve has a dual mandate as set by the US Congress.
    • The mandate consists of price stability (inflation ) and Full employment.
    • After last week’s Jackson hole conference, where Powell stated that the FOMC will push hard to get inflation back to 2% , even if it induces a recession.
    • Investors questioning the statement :  I.E. Did this imply “at the expense of” the 2nd part of the mandate ? i.e. JOBS
    • A weaker than expected jobs report today, might bring the 2nd part into play and could reduce Bets on a 75bps hike in September.
      • This was alluded to by Atlanta Fed President Raf Bostic, who said he would be guided by the data.
    • Conclusion :  A weaker than expected jobs report ( less than 300k ) likely to be Risk asset supportive and will BENEFIT THE ZAR.
      • Likewise, another strong number will ensure the FED does the priced in 75 and could result in another round of Risk aversion.

Significant Market Data




  • With the NFP report looming large this afternoon, expect a subdued session ahead of the data.
    • We can expect some Dollar profit-taking, allowing for some ZAR gains early in the session.
      • The local unit losing 3.52% this week after briefly reaching 16.7300 on Tuesday.
  • Risk assets in early Asian trading also flat lining, with US stock futures little changed ahead of the key jobs report.
    • This indicates a market “ on edge” ahead of the data especially after last month’s surprise.
    • The report likely to offer insight on the state of the economy and influence the outlook for monetary policy.

A word of caution : Prediction of the NFP is impossible and it would be best to wait for the number or reduce exposure by 50% ahead of the release.

Expected Ranges

  • USDZAR :  Expect a range 17.1800-17.3700
    • Importers 17.2500-17.1800
    • Exporters 17.3200-17.3700
  • EURZAR :  Expect a range of 17.0800-17.3500
    • Importers 17.1600-17.0800
    • Exporters 17.2600-17.3500
  • GBPZAR :  Expect a range of 19.8500-20.0600
    • Importers 19.9200-19.8500
    • Exporters 19.9900-20.0600


  • USDZAR 17.2800
  • EURZAR 17.2300
  • GBPZAR 19.9600


  • Cyril Ramaphosa will meet US President Joe Biden at the White House on September 16 to discuss trade, investment, climate and energy, the White House said on Thursday.
    • “The two Presidents will reaffirm the importance of the SA-USA partnership, and discuss how to  work together to address regional and global challenges,”
      • This according to press secretary Karine Jean-Pierre said in a statement. Bloomberg
  • To succeed in the fight against corruption and state capture, Chief Justice Raymond Zondo said that the protection of whistleblowers was paramount.
    • Speaking at News24’s On The Record Summit in Sandton on Thursday, the Chief Justice highlighted the vital role of whistleblowers in unearthing the rot.
    • His comments come a week after the one-year anniversary of Gauteng Health whistleblower Babita Deokaran’s murder. News 24
  • The story around PHALA-PHALA gate continues.
    • The country continues to ask the question if CR will be charged with “contravention of the exchange control act “
    • Earlier, one of the men allegedly implicated in the robbery at Ramaphosa’s farm, alleged that the Hawks took him out of prison for questioning in connection with the robbery without his lawyer present.
    • But the Hawks denied these allegations. EWN
  • The battle for the “unbanked” market continues, as Shoprite-Checkers joined the party.
    • Following the success of TymeBank who partnered with Pick N Pay and Capitec, Shoprite, the country’s largest retailer, is now competing head on.
    • Its Money Market Account is now a fully-fledged bank account and can receive payments from any bank in South Africa.
    • Shoprite said  this will be the first fully-fledged transactional bank account to be offered by a retailer in the country.
    • It also says the account is the “lowest cost entry-level bank account on the market”.
    • The account has a single fee: R5 for a cash withdrawal at Shoprite/Checkers/U-Save tills. Moneyweb


  • After a late session rally on Wallstreet, we find US stock futures were unchanged on Friday.
    • Investors focussing on this afternoon’s key jobs report that could offer insight on the state of the economy and influence the outlook for monetary policy.
  • Futures contracts tied to the three major indexes were all trading near breakeven.
    • In regular trading on Thursday, the Dow and S&P 500 rose 0.46% and 0.30%, respectively, while the tech-heavy Nasdaq Composite lost 0.26%.
  • All three benchmarks are set to decline for the third straight week, after the Fed’s commitment to fight inflation and that it would take priority over growth.
    • The US economy is expected to have added 300,000 jobs in August, less than the surprisingly strong 528,000 jobs added in July, and another big upward surprise could bolster bets for more aggressive tightening.


  • Yields continue to spike across the global as Central bankers continue to battle against multi-decade high inflation.
    • The  US 10YT yield increased towards 3.30%, the highest in two and a half months.
    • Yields also approaching a 3-½-year high hit in May ahead of the highly anticipated jobs report on Friday.
  • Yesterday’s weekly jobless claims unexpectedly fell to a 9-week low at the end of August.
    • The data indicating that the economic slowdown is not yet triggering widespread job losses.
  • The US nonfarm payrolls report is expected to show the economy added 300K positions in August, strengthening the case for aggressive tightening by the Fed to combat inflation.
  • Some Fed officials have been reiterating the fed funds rate needs to raise to at least 4% by early next year and stay there to curb soaring inflation.


  • The Dow gained 145 to 31,656
  • The Sp500 added 11 to 3,966
  • The Nasdaq declined 31 to 11,785

Futures Trading:

  • image : Trading economics


  • Asian markets mixed after a late rally on Wallstreet.

    • In Japan, the Nikkei 225 fell 0.2% to close at 27,600. The benchmark on track to decline for the second straight week.
      • Comments from US Fed officials committing to higher interest rates to curb inflation dampened sentiment.
      • Markets are also monitoring sharp falls in the Yen which has breached the key 140 level and slid to a fresh 24-year low.
      • The sharp drop allowing for speculations that Japanese authorities may intervene in the currency markets.
      • A weaker Yen has boosted profits for export-heavy industries in Japan, but has been a bane for households and businesses as it pushed up import costs.  Reuters
    • In Australia, the ASX 200 declined 0.2% to around 6,830 and on its way to a nearly 4% weekly fall.
      • Fed risks as well as persistent economic concerns in China, Australia’s top trading partner, also weighed on domestic markets.
      • China fears as the country adheres to its strict zero-Covid strategy and suffers from property sector woes.  Reuters
  • Brent crude oil rallied above $93/ bl, but were still set for a sharp weekly loss.
    • Traders citing FED hawks and tighter monetary policy to could affect demand as well as renewed Covid lockdowns in China affecting the demand outlook.
    • Brent has lost about 7% so far this week and is down more than 30% from this year’s high.
    • Traders citing  persistent economic concerns of a recession as well as demand from concerns from China.
    • Fresh Covid lockdowns in major cities, also dampened the demand outlook.
    • On the supply side, investors are closely monitoring progress around efforts in reviving the 2015 nuclear accord, as a potential deal could unlock substantial flows from Iran. Gulf Energy News
  • Gold declined and managed to stay above $1,700/oz after a rebound in US stocks boosted sentiment.
    • Bullion remains in a downtrend in the face of a rampant Dollar as well as the Federal Reserve’s aggressive stance against inflation.
    • Officials committed to keeping interest rates higher for longer.
    • Manufacturing activity in the US grew steadily in August despite weakness in other major economies.
    • Latest US employment data also remained solid, while investors await the highly-anticipated August jobs report on Friday.
    • Analysts of the opinion that it could offer fresh clues on the Fed’s rate hike path. Kitco metals
  • The US dollar traded at 109.6 on Friday and in turn remained near a 20-year high. The Buck on target for a third straight week of gains.
    • Traders holding onto dollar positions ahead of a highly-anticipated monthly jobs report that could reinforce the Federal Reserve’s aggressive stance against inflation.
    • The NFP report is forecasted to be +300,000 jobs in August, less than the unexpectedly strong 528,000 jobs added in July.
      • Risk is another big upward surprise that could bolster bets for further monetary tightening.
      • Robust US manufacturing data in August also supported Fed rate hike bets and propped up the Dollar as factory activity in other major economies showed signs of weakness.  FX news

    • Russia’s energy influence over Europe ‘is nearly over’ as bloc races to store up on winter gas supplies.
      • Europe has endured a sharp drop in gas exports from Russia, traditionally its largest energy supplier.
      • It has deepened a bitter dispute between Brussels and Moscow and exacerbated the risk of recession and a winter gas shortage.
        • “Europe is heading towards a very difficult winter, probably two years of a very difficult adjustment with a lot of economic pain”
        • This was according to Agathe Demarais, global forecasting director at The Economist Intelligence Unit, told CNBC via telephone. Source : CNBC markets

Copyright ©
2022 RussellStone Treasury 
All rights reserved.

Our mailing address is:

Want to change how you receive these emails?
You can update your preferences or unsubscribe from this list.