Morning NOTE

TODAY:

• The Rand opening stronger after Cyril Rampahosa’s comprehensive victory in the ANC elective conference.
  • The result confirming that CR will be the ANC’s leader as we head into the next election cycle.
  • Markets welcomed the news and the ZAR recovered from 17.7400 to head to a strongest level of 17.2000.
  • This morning Asian markets are lower this morning , on the back of some Risk aversion following a policy change by the BOJ .
    • I.e. allowing for higher interest rates, and this the only reason why we have not seen more ZAR gains.
       
• The inflationary trend appears to have turned and we expect softer inflation data going forward.
  • This will likely slow the Fed down in 2023, and we expect a stronger ZAR as well as RISK assets in 2023.
  • Earlier German PPI also surprised to the downside, once again highlighting a reversal in global inflationary trends.

On the data front,

We have

• Tuesday 15h30 : US BUILDING PERMITS EXPECTED 1.483milllion vs 1.512million previous ( ** insight into the effect of rate hikes on the  housing sector).
• Thursday :15h30 : US GDP GROWTH QoQ EXPECTED +2.9% VS -0.6% PREVIOUS .
• Friday 15H30 US PCE YOY  EXPECTED 5.5% VS 6% PREVIOUS  (** What the FED looks at for inflation).
   
• TRADE : SELL USDZAR ON RALLIES (after Ramaphosa’s victory)

Expected Ranges

• USDZAR :  Expect a range 17.0600-17.6600
  • Importers 17.2600-17.0600
  • Exporters 17.4600-17.6600
     
• EURZAR :  Expect a range of 18.1700-18.6800
  • Importers 18.3100-18.1700
  • Exporters 18.5100-18.6800
     
• GBPZAR :  Expect a range of 20.8200-21.3400
  • Importers 20.9800-20.8200
  • Exporters 21.1600-21.3400