The ZAR traded around the R18.2000/$ level on the back of a poor liquidity conditions due to the US holiday.
The Rand consolidation near the 18.2000 level continued with a strong “BID BIAS” towards the local currency.
- Following a negative start in Asia, markets rebounding at the European open allowing for a rally in the Euro, Yen and the ZAR.
- The local unit testing the weekly lows oft 18.1400 , after an early Euro spike.
- The European single currency gaining 0.2% to open at 1.0945 on the back of ECB President Lagarde indicating high confidence in the likelihood of further rate hikes in July.
- She also emphasized that the ECB had no intentions of pausing, in contrast to the more cautious stance of the Federal Reserve.
- The divergence in policy between the FED and the ECB allowing for Euro gains across the board.
- Locally, traders await the SA inflation data tomorrow as well as Jerome Powell’s 2 day testimony on Wednesday and Thursday.
Data This week
- 09H00 : SA LEADING BUSINESS INDICATORS MOM -1.7% F/CAST VS -2% PREVIOUS
- 12H30 : US FED –BULLARD SPEAKS
- 14H30 US BUILDING PERMITS 1.425M EXPECTED VS 1.417M PREVIOUS
- 17H45 US FED – WILLIAMS SPEAKS
- 10H00 : SA CPI INFLATION 6% EXPECTED VS 6.8% PREVIOUS
- 10H00 : SA CORE CPI INFLATION 5.2% EXPECTED VS 5.3% PREVIOUS
- 16H00 : US FED CHAIR JEROME POWELL TESTIMONY TO CONGRESS
- 22H00 : US FED MESTER SPEAKS
- 13H00 : Bank of ENGLAND RATE DECSION + 25 BPS TO 4.75%
- 14H30 : US JOBLESS CLAIMS 260K EXPECTED VS 262K PREVIOUS
- 16H00 : US FED CHAIR JEROME POWELL TESTIMONY TO CONGRESS
- 16H00 : US FED MESTER SPEAKS
- 11H15 : FED – BULLARD SPEAKS
- 14H00 : FED BOSTIC SPEAKS
- 15H45 : ECB – PANETTA SPEAKS
- 15H45 : US MANUFACTURING PMI’S 48.3 EXPECTED VS 48.4 PREVIOUS
- 15H45 : US SERVICES PMI’S 54 EXPECTED VS 54.9 PREVIOUS
- 19H40 : US FED MESTER SPEAKS
Market Movement Today:
- The Rand rally continued with the local unit capitalising on Risk asset demand in early trading.
- After the US holiday on Monday, the local unit benefitting positive risk sentiment.
- The European open allowing a for a bounce in equity futures as well as the Euro and Yen Vs the Dollar.
- The local unit opening up at 18.180, but with a strong bid bias due to offshore Dollar selling.
- The major risk however remains Powell’s testimony
- Powell and other governors will engage in a 2 day testimony before the US congress.
- In addition, noted speakers like Bullard, Williams, Mester and Bostic are all scheduled to speak during various time of the week.
- FX markets betting on a “dovish” Powell, although 10year yields remain elevated at 3.80%.
- The ZAR benefitting from early RISK-ON sentiment .
Markets this morning
- USDZAR 18.1800
- DOLLAR 102.32
- EURUSD 1.0944
- SP500 4,400
- GOLD 1956
- US10YT 3.79%
- USDZAR : Expect a range 18.0800-18.3200
- Importers : 18.1600-18.0800
- Exporters : 18.2400-18.3200
- EURZAR : Expect a range of 19.7400-20.0100
- Importers : 19.8300-19.7400
- Exporters : 19.9200-20.0100
- GBPZAR : Expect a range of 23.1400-23.4100
- Importers : 23.2300-23.1400
- Exporters : 23.3200-23.4100
- USDZAR : 18.1800
- EURZAR : 19.8700
- GBPZAR : 23.2600
- Political parties have dismissed President Cyril Ramaphosa’s peace mission to Russia and Ukraine as nothing but a waste of time and resources.
- They said the visit by Ramaphosa came at a bad time when both Russia and Ukraine have made it clear that they will continue fighting.
- The Democratic Alliance (DA) also said it will be submitting questions in parliament to determine the full cost of the trip that was hampered by logistical delays. |Source: EWN
- Joburg Mayor Kabelo Gwamanda has clarified details surrounding his academic qualifications.
- Last month, he was the subject of a Carte Blanche investigation, which revealed that his highest level of education was grade 10.
- Weeks after he was elected to the mayoral office, he insisted that his academic achievements had no direct impact on his ability to lead the city.
- He said he had obtained a National Intermediate Certificate (NIC).
- According to the Department of Higher Education’s website, the NIC is a level three certificate which is awarded to a student on completion of grade 10. |Source : EWN
Cape of Storms
- A weather warning for strong wind has been issued for parts of the Western Cape.
- On Monday morning, several trees had been uprooted and areas flooded.
- The province has been lashed by severe weather for several days, resulting in two deaths and thousands being displaced.
- Capetonians have again been battered by strong winds and heavy rains, as severe weather in the province continued on Monday. Source : News 24
- US stock futures fell on Tuesday to kick off a holiday-shortened week of trading.
- Investors looking ahead to fresh commentary from Federal Reserve officials and more economic data this week to guide the outlook.
- Last week, the Dow gained 1.25%, the S&P 500 jumped 2.58% and the Nasdaq Composite rallied 3.25%, with the tech-heavy Nasdaq index posting its eighth consecutive positive week.
- Those gains came as the Fed paused its aggressive tightening campaign last week and Fed Chair Jerome Powell said the central bank has yet to make a decision on policy ahead of the July meeting.
- Investors now look ahead to New York Fed President John Williams and Fed Vice Chair for Supervision Michael Barr’s appearance at a corporate governance event on Tuesday.
- Fed’s Powell will also testify before Congress on Wednesday and Thursday. | Source : CNBC
- US 10 Year Note Bond Yield was 3.79 % on Tuesday June 20, according to over-the-counter interbank yield quotes for this government bond maturity.
- Investors are eagerly awaiting the testimony of Fed chair Jerome Powell before the US congress on Wednesday and Thursday
- Across the pond, the Bank of England is “caught between a rock and a hard place” as it prepares for a key monetary policy decision.
- Economists citing a backdrop of sticky inflation and a tight labour market
- Bond yields rising towards the 4.5% mark and reaching its highest level since September 2022.
- Investors eagerly awaited the Bank of England’s policy meeting scheduled for Thursday.
- The two-year gilt yield also exceeded 5%, a level not seen since the 2008 financial crisis.
- British policymakers will raise interest rates for the 13th consecutive time, pushing them to their highest point in 15 years.
- The BOE continues to battle persistent inflationary pressures and recent data indicating a faster-than-expected rise in wages and sustained economic growth in April.
- Investors are also keeping a close eye on May’s inflation data, set to be released on Wednesday.
- Speculation among investors suggests that the UK policy interest rate may reach its peak at 5.75% by the beginning of next year. | Source : CNBC
**US MARKETS CLOSED FOR HOLIDAY
image: Trading economics
Eastern markets tracking lower on the back of renewed investor concerns ahead of a week filled with Fed commentary on monetary policy.
- In Japan, the Nikkei 225 inched up 0.06% to close at 33,389, with Japanese shares struggling for direction amid a lack of market-moving catalysts.
- Investors also continued to book some profits following a strong run-up that pushed Japanese stocks to fresh 33-year highs last week.
- Moreover, markets turned cautious ahead of several appearances from US Federal Reserve officials this week.
- In China, the Shanghai Composite fell 0.4% to below 3,250, with mainland stocks struggling to gain traction even after the central bank cut some of its key lending rates.
- The rate cuts to counter signs that the post-pandemic recovery is faltering.
- The People’s Bank of China lowered both its one-year and five-year loan prime rates by 10 basis points to 3.55% and 4.2%, respectively.
- Earlier, in a surprise meeting, US Sec of state, Anthony Blinken met Chinese President Xi Jinping for a 35-minute meeting toward the end of his two-day visit.
- Blinken also met China’s top diplomat Wang Yi as well as Foreign Minister Qin Gang during the visit.
- U.S. President Joe Biden said Secretary of State Antony Blinken “did a hell of a job” in Beijing, but he wasn’t the only one who saw progress in the talks. Source: Reuters
Brent crude futures and US WTI oil futures all lower in early Tuesday trading.
- US WTI crude futures fell toward $71/bl and Brent fell below $76 per barrel.
- Oil prices giving back some gains from last week as global economic uncertainties continued to weigh on the demand outlook.
- With major banks downgrading their GDP growth forecasts for China.
- The latest data pointed to a faltering post-pandemic recovery in the world’s top crude importer.
- Meanwhile, the US oil benchmark gained 2.5% last week as interest rate cuts in China and a pause in the US Federal Reserve’s tightening campaign raised hopes for a demand rebound.
- Oil markets also got a boost from a sharp decline in the dollar, as a weaker greenback makes oil cheaper for holders of other currencies and drives up risk appetite in the markets.
- On the supply side, voluntary output cuts implemented in May by OPEC+ and additional cuts by Saudi Arabia in July kept oil prices supported. |Source: Gulfnews
Precious metals lower on the back of a rebound in the Dollar and rising US yields
- Gold held around $1,950/oz, hovering close to its weakest levels in three months.
- Last week, the Fed decided to keep interest rates unchanged but hinted at further tightening this year,
- The FOMC saying in its latest report to Congress that inflation in key parts of the US services industry “remains elevated and has not shown signs of easing.”
- The global precious metals market will reach $403.1 billion by 2028 and be led by the gold sector, according to India-based consultancy firm Fortune Business Insights.
- This is up from 2021’s $275 billion.
- Between 2021 and 2028, the precious metal market’s compound annual growth rate (CAGR) is estimated to be at 5.6%, the firm said in its report released in June.
- Gold will play a vital role in the growth of the precious metals market.
- “The increasing investments in a commodity such as gold due to its low-risk factor compared to other investments such as equities, bonds, or real estate are fuelling the market”. |Source: Kitco
The US dollar remains on the back foot after the FED’s hawkish pause last week.
- The dollar traded above 102 on Tuesday as investors continued to assess the outlook for US monetary policy ahead of appearances from several Federal Reserve officials this week.
- Last week, the index tumbled 1.2% after the Fed kept interest rates unchanged, pausing its aggressive tightening campaign when other major lenders were still raising borrowing costs.
- However, the body hinted at further policy tightening this year, saying in its latest report to Congress that inflation in key parts of the US services industry “remains elevated and has not shown signs of easing.”
- Markets now expect the Fed to lift rates again by 25 basis points in July and halt afterwards.
- Meanwhile, the European Central Bank delivered another 25 basis point rate hike on Thursday and signalled more increases.
- The Bank of England is set to raise rates again this week. |Source: FX Street