View this email in your browser

Morning NOTE

20 April 2023


The ZAR endured another wild session, with a 18.3600-18.0600 trading range on the back of SA & global inflation data.


The Rand lost early ground following higher than expected UK & SA inflation data.

  • The data supporting views that global centrla banks remain determined to fight inflation and continue to raise rates.
    • However, later in the session Eurozone CPI surprised strongly to the downside following its American counterparts.
    • Markets reversed and the ZAR gained all the way to 18.0600.
  • The price action speaks of uncertainty in markets as market makers(banks) collect stop loss orders on both sides of the range.
    • The situation not helped by Fed commentators, who speak on a daily basis about the need to be tough on inflation, 
      • even though we’ve had unprecedented rate hikes.
    • Thus Igroning the data, they all but dashed hopes that the Federal Reserve will soon be able to pause interest rate increases.
    • I remind the reader, that these are the same individuals who beat the “transitory drum” for months on end when inflation was allowed to run rampant.
      • and they also refuse to acknowledge that inflation has certainly peaked and  continues to head lower. 
        Thus, keeping the Dollar “BID” remains the hawkish comments from several policymakers this week.

  • BUT, a decline in US mortage applications as well as a poor Beige book report, stalled the rise in rates as the 10Yr moved back below 3.60%.
    • The Beige Book survey showed the US economy stalled in recent weeks as hiring and inflation slowed and access to credit narrowed.
    • The data once again showing the US economy continues to face major headwinds due to high interest rates as well as a pull back in bank lending .
  • This morning German PPI showed a dramatic drop at 7.5% vs 15.8% in the previous period of February. (another indicator of inlfation slowing down).

On the local front SA inflation surprised to the topside (7.1% YOY) with Food inflation(14%) spiking. 
 The data once again above the SARB’s 3-6% band and increases the chances of another rate hike. 
This would be ZAR supportive as the carry remains supportive, but continue to hurt South Africans who battle with daily loadshedding.
In addition, the decline in  SA retail sales -0.5% (yoy) showed a SA consumer struggling to stay afloat. 

•    USDZAR 18.1900
•    DXY 101.83
•    SP500 4148
•    GOLD 1997
•    US 10YT 3.57%

Data This week


Market Movement Today:

The Rand opening sharply stronger following a sharp drop in German PPI at the open.

  • The German Producer inflation nearly halving with a print of 7.5% vs 15.8% earlier. 
  • The data once again showing that inflation has topped out and that centrla bankers are once again behind the curve 
  • Keeping the Dollar on the offensive remains hawkish Fed commentators but reality likely win out.
    • Bonds yields also declininig with the US10YT below 3.60% and sending the Dollar lower.
  • Risk assets also rebounding in early asian trading after incurring losses at the open.
    • Gold once again breaching $2,000/oz on the prospects of lower interest rates.
  • The Dollar retreating with the ZAR opening at 18.19000.
    • Yesterday’s technical failure at the week’s high of 18.3200 allows for a test of the lower side of the range.
      • we expect 18.0600- 18.0000 to be in play. 
We continue to advocate for a stronger ZAR and encourage exporters to use the forward and options curves to their advantage. 

Expected Ranges:

  • USDZAR : Expect a range 18.0600-18.2700
    • Importers : 18.1300-18.0600
    • Exporters : 18.2000-18.2700
  • EURZAR : Expect a range of 20.0100-19.8300
    • Importers : 19.8900-19.8300
    • Exporters : 19.9500-20.0100
  • GBPZAR : Expect a range of 22.5300-22.6800
    • Importers : 22.5800-22.5300
    • Exporters : 22.6300-22.6800


  • USDZAR : 18.1900
  • EURZAR : 19.9400
  • GBPZAR : 22.6200



  • Electricity Minister Kgosientsho Ramokgopa said that there would not be a blackout in this country where there was a total collapse of the grid.
    • The country has been flipping between load shedding stages 5 and 6 and there have been concerns about a total collapse. Ramokgopa said that this would not happen.
  • In addtion, Persistent power cuts cost the South African Revenue Service (Sars) up to R60bn in taxes.
  • The team faced several gruelling questions from members of Parliament (MPs) on how the energy crisis affected its operations and revenue collections.
  • This was revealed in Parliament on Wednesday while Sars commissioner Edward Kieswetter and other Sars officials briefed Parliament on the entity’s annual performance plan.


  • A Ukrainian Nobel peace prize winner on Wednesday called on South Africa not to allow Russian President Vladimir Putin to attend a Brazil, Russia, India, China and South Africa (BRICS) summit in the country in August.

    • Oleksandra Romantsova, the head of an NGO that became the winner of Ukraine’s first ever peace prize in 2022, urged the South African government to “show us that they care”.
    • The ICC issued an arrest warrant against Putin in March meaning Pretoria, due to host the BRICS bloc summit this year, would have to detain him on arrival. IOL 

  • The Airports Company SA (Acsa) said that some flights were delayed at Cape Town International Aiporton Tuesday morning, apparently due to a fibre internet network fault.
  • Acsa said that Tuesday morning’s fog and poor visibility conditions compounded the airport’s problems, with some planes being diverted to other nearby landing strips.
  • The company said that the current delays would impact on other airports and urged air travellers to regularly check for updates. EWN 


  • Those moves came as mixed earnings results prompted market caution among investors.
  • DOW  fell 79 to 33.897
  •  SP500 flat at 4,154
  •  NASDAQ added 3 to 12,157

  image: Trading economics


The US Dollar

The dollar steadied near 102 after gaining some ground in the previous session.
  • The Buck supported by expectations that the Federal Reserve will tighten policy further. 
  • New York Fed Bank President John Williams said on Wednesday that inflation is still at problematic levels and the central bank will act to lower it. 
  • St. Louis Fed President James Bullard also said earlier this week that he favors a higher terminal rate of between 5.50% to 5.75%.
  • While Atlanta Fed President Raphael Bostic said he sees one more 25 basis point increase before pausing. 
  • Markets are currently pricing an 86% chance the Fed would raise the fed funds rate by a quarter-point in May. 

Asian markets

  • In Japan, the Nikkei 225 sell 0.5% to around 28,580 sliding for the second straight session.
    • Investors continued to grapple with heightened global economic uncertainties and the prospect of further interest rate rises.
    •  Traders also digested data showing Japanese exports grew more than expected in March, though the country posted a trade deficit for the 20th consecutive month.
    • Notable losses were seen from index heavyweights such as SoftBank Group (-2.2%), Toyota Motor (-1.1%).
  • In Australia, the ASX 200 traded flat at 7,362 on Thursday.
    • Investors continue to worry about the prospect of further interest rate hikes, with the US Federal Reserve expected to deliver another 25 basis point increase in May.
    • Domestically, the Reserve Bank of Australia indicated that it is determined to do what is necessary to bring inflation back down within target, as revealed in the latest policy meeting minutes. 
    • Heavyweight iron ore miners led the decline, including BHP Group (-2.6%), Rio Tinto (-2.3%). Reuters 

Crude oil

  • WTI crude futures fell toward $78/bl extending losses from the previous session.
  • Prices  weighed down by concerns that higher interest rates could dampen global economic growth and future energy demand. 
    • The US Federal Reserve is expected to deliver another 25 basis point rate hike in May, while the European Central Bank is seen raising borrowing costs three times in the next few months. 
  • Meanwhile, the latest EIA report showed crude oil stocks in the US fell by 4.581 million barrels last week, far exceeding forecasts for a 1.088 million barrel drop.
    • It offered a somewhat bullish outlook for short-term demand. 
    • Also, bets increased that demand from China would remain strong after the first quarter GDP figures pointed to a sharper recovery. Gulf News 


  • Gold prices rebounded to above $2,000/oz after falling in the prior session to the lowest level so far this month of below $1,975/oz.
    • The US dollar was subdued ahead of meetings from central banks in the next few weeks.
    •   The yellow metal gaining this morning following weak inflation data out of europe and a drop in yields.
    • Gold continues to mirror the Dollar and any drop in demand for the buck will likley fuel dollar demand.  kitco metals 

Copyright ©
2023 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.