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Morning NOTE

23 November 2022


The ZAR strengthened as Risk appetite returned to markets ahead of the US FOMC minutes.


The Rand gained just under 1% or 16 cents, on the back of improved investor risk sentiment.

  • US treasury yields retreated and the 10YT traded at 3.78%, which allowed for a spike in the SP500 that breached the 4,000 level.
  • Investors becoming more comfortable that “inflation has peaked”, and are positioning themselves for a “dovish” 2023.
    • Ofcourse, volatility remains as Fed speakers and various governors continue to push back against the idea of a “FED PIVOT”
    • For now the data supports a dovish view, and we can see Risk appetite increasing as we head into he final month of the year.
    • This will be ZAR supportive and the ZAR likely to test R17/$ as we head into the new year.
  • This morning we also have SA CPI at 10h00 which will give us an insight into tomorrows SARB MPC.
    • The  SARB MPC meets and the markets are pricing in another hike of 75bps.
      • This would be ZAR supportive as the SARB has maintained its rate advantage vs the US Dollar.
      • With SA inflation data also due this week , expect some volatility , but the focus will remain on the Fed and FOMC.
  • Eskom  load shedding now at level 5.
  • This evening we have the FOMC minutes and Fed language will be of super importance.
    • if we hear, “ following the data “, the this would be seen as dovish and we can expect a RISK ON environment.
      • The Fed is widely expected only hike 50 bps in December, following the 4 consecutive 75 bps hikes.
      • Markets betting that 2023, could see smaller hikes of only 25 bps.

Significant Market Data:


  • 10h00 : SA INFLATON YOY expected  7.4% VS 7.5% PREVIOUS
  • 10:00 : SA INFLATON CORE YOY expected 4.9% VS 4.7% PREVIOUS


  • 11H30 : SA PPI YOY expected  16.05% VS 16.3% PREVIOUS


  • The ZAR once again opening inside the previous day’s range.
    • The local unit drifting below the recent point of control at 17.3000.
    • ZAR gains attributed to improved risk appetite ahead of the FED FOMC minutes.
    • NB: It would take “NEW” information to drastically move the market away from this point.
  • The opening once again showing a market with little conviction, and we are likely to trade the range again this session.
    • Last week’s 17.5600 and 17.1000 likely to remain intact.
  • Risk events :  SA CPI at 10h00 with US FOMC minutes at 9pm and SARB MPC rate decision on Thursday.
    • Also, Markets continue to be Risk positive following lower than expected US Inflation data last week.
  • Trade : USDZAR : Range trading ,
    • EXPORTERS : sell above 17.3000 towards 17.4000 &
    • IMPORTERS  :Buy  17.2000 TOWARDS 17.1000

Expected Ranges

  • USDZAR :  Expect a range 17.1400-17.3200
    • Importers 17.2000-17.1400
    • Exporters 17.2600-17.3200
  • EURZAR :  Expect a range of 17.6500-17.9200
    • Importers 17.7400-17.6500
    • Exporters 17.8300-17.9200
  • GBPZAR :  Expect a range of 20.3900-20.6000
    • Importers 20.4600-20.3900
    • Exporters 20.5300-20.6000


  • USDZAR 17.2300
  • EURZAR 17.8200
  • GBPZAR 20.4900


  • President Cyril Ramaphosa and former Health Minister Zweli Mkhize have been nominated as the top two candidates to stand for the position of African National Congress (ANC) president.
    • Kgalema Motlanthe, the ANC’s electoral committee head, said Ramaphosa received 2,037 nominations while Mkhize received 916.
    • Motlanthe announced the candidates vying for the top six positions in the ANC’s national executive committee. EWN

Malema back in court

  • The South African Human Rights Commission (SAHRC) will take Economic Freedom Fighters (EFF) leader Julius Malema to the Equality Court on Words.
    • The commission wants to make an urgent application for an interdict regarding comments that Malema made at the EFF’s Western Cape people’s assembly.
    • The commission hoped Malema would retract his statements that it said constituted incitement of violence and hate speech. News24

Grey listing

  • Finance Minister Enoch Godongwana said the government still has more hoops to avoid being greylisted by the Financial Action Task Force (FATF).
    • Greylisting would impact South Africa’s ability to trade internationally.
      • On Tuesday, the National Assembly passed a bill that aims to combat money laundering and terrorism financing.
      • But the bill has not been supported by the majority of opposition parties, which complained that it’s ill-conceived and too rushed.
      • He said, “Avoiding potential greylisting is not the responsibility of a single department or government. It is a collective responsibility.” EWN


  • US stock futures were little changed on Wednesday as investors braced for the latest Federal Reserve meeting minutes that could guide the US rates outlook.
    • On Tuesday, the Dow rose 1.18%, while the S&P 500 and Nasdaq both jumped 1.36%.
      • Those moves came as upbeat corporate earnings and bets for a less aggressive tightening from the Fed underpinned equities.
    • Investors now look ahead to the Fed meeting minutes for clues on the central bank’s tightening plans.
      • US markets will be closed on Thursday for the Thanksgiving holiday and will close early on Friday.


  • The yield on the US 10-year traded at 3.76% .
    • It was below 4.2% touched early in the month, as traders await the FOMC minutes release on Wednesday for more clues on the Fed’s next rate hikes.
    • Fed policymakers have been trying to push against the dovish narrative from markets, with many officials signalling rates would go higher than projected in September.

Ahead of the minutes recall;

  • The Fed raised the target range for the federal funds rate by 75bps to 4% during its November 2022 meeting.
    • It was the 6th consecutive rate hike and the 4th straight three-quarter point increase, pushing borrowing costs to a new high since 2008.
      • The decision came in line with market forecasts.
      • Policymakers also said that ongoing increases in the target range will be appropriate because the cumulative effect  lags economic activity and inflation by approximately 18 months.
      • The message could signal a smaller rate hike in December ,
        • but during the press conference Chair Powell also noted the ultimate level of interest rates will be higher than previously expected.
  • The Fed aims to attain a stance of monetary policy that is sufficiently restrictive to return inflation to 2%, which remains elevated around 40-year highs. source: Federal Reserve


  • The Dow added 397 to 34,098
  • The SP500 added 53 to 4,003
  • The Nasdaq  gained 149 to 11,174


Asian markets trading sharply higher on the back of a stronger close on Wallstreet.

  • In Japan, the Nikkei 225 climbed 0.61% to 28,116, extending gains from the previous session, with nearly all sectors finishing in positive territory.
    • However,  investors remain cautious ahead of US Federal Reserve meeting minutes that could offer clues on the trajectory of US rate hikes, while also monitoring the Covid situation in China.
    • Strong gains were seen from automakers, healthcare and commodity-linked firms such as Toyota Motor (2.4%).
  • In China, the Shanghai index rose 0.26% to close at 3,097, but most mainland stocks remained under pressure as major Chinese cities imposed some movement restrictions to arrest fresh Covid outbreaks.
    • In the latest developments, Shanghai will order people traveling into the city to avoid public places.
    • This would include restaurants, malls and markets starting from Thursday to prevent a nationwide Covid surge from hitting the city.

The US dollar steadied around 107 on Wednesday, holding a recent decline as investors cautiously awaited the latest Federal Reserve meeting minutes that could offer clues on the central bank’s future tightening plans.

  • Traders have been analyzing remarks from Fed officials who have largely maintained a strong commitment to bring down inflation,
    • but voiced support for a slower pace of interest rate hikes if warranted. I
  • Investors also look ahead to a slew of US economic reports including jobless claims, durable goods and new home sales data.

US WTI crude oil  rose above $81/BL, extending gains from the previous session as supply-side uncertainties overshadowed demand concerns.

  • Investors awaited further details on G7 plans to cap Russian oil and worried about how Russia would respond after it previously stated that it won’t sell crude to countries that adopt such measures.
  • In the US, industry data showed that US crude inventories dropped by 4.2 million barrels last week, much higher than forecasts for a 2.2 million barrel draw.
    The US oil benchmark was also lifted after the UAE, Kuwait, Iraq and Algeria backed claims by Saudi Arabia’s energy minister that OPEC+ was not considering increasing output.  Gulf Energy news

Gold recovered to $1740/oz after falling to near $1,730 /oz, its weakest levels in two weeks as investors cautiously awaited the latest Federal Reserve meeting minutes that could guide the outlook for future US rate hikes.

  • Traders have been parsing through remarks from Fed officials who have largely maintained a strong commitment to bring down inflation
    • , but voiced support for a slower pace of interest rate hikes if warranted.
  • In the latest commentary, San Francisco Fed President Mary Daly warned against overtightening,
    • while Cleveland Fed President Loretta Mester said she wants to see inflation come down sustainably before supporting a pause.

Gold remains highly sensitive to the rates outlook as higher interest rates raise the opportunity cost of holding non-yielding bullion, denting its appeal. Kitco metals

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