View this email in your browser

Morning NOTE

26 January 2023


The ZAR traded stronger to reach a 17.0900 on the back of improved Risk sentiment in New York. 


  • The Rand gained nearly 1% on the back of improved risk taking ahead of today’s key US GDP report as well as SARB MPC meeting,
    • Traders expecting both prints to be in favour of the ZAR.
    • The MPC is expected to hike 50 bps, which exceeds the Fed’s expected rate increase of 25 bps.
    • US GDP also expected to print lower than expected, which will also be dovish for the FED.
  • The US data in particular will result in a dovish tone for the Fed, that will likely result in another Risk asset rally.
    • We expect the Dollar to remain under pressure in this environment on the back of lower yields,
      • as well as investors continuing the switch from Safe haven (the Dollar) assets in to Risk assets (Stocks & EMFX, like the ZAR).
  • On Wednesday, the theme continued with UK PPI data slowing for the 5th month in succession.
    • The longer end of the curve for UK interest rates, bold enough to price in an INTEREST RATE CUT by the Bank of England.

Risk event : SARB MPC and US GDP

Data this week


  • 15H30 :  US GDP EXPECTED 2.6% VS 3.2% QoQ
  • 15H30: US DURABLE GOODS +2.6% VS -2.1% PREVIOUS  MoM.



Market Movement Today:

  • The Rand  traded stronger reaching a level of R17.0900/$ in overnight trading on the back of improved global risk sentiment.
  • Stocks recovering from earlier lows in New York to support risk assets.
  • This morning expect some short term profit taking with the ZAR probably drifting weaker as banks fill order books.
    • Levels above 17.1300 to 17.1800 DOLLAR SELL LEVELS
    • The trend remains for a stronger ZAR for the session and ahead of the MPC.
      • Also, on the back of lower US yields and we expect this to continue into H1 of 2023.
  • In New York, A major contributor to the rally was TESLA, who in afterhours trading, posted record earnings,
    • The results ,sending the SP500 and other stock markets higher off its lows and also a rapid switch into risk assets that supported the ZAR.
  • The dollar coming under pressure on the back of tumbling yields with the US 10YT once again below 3.5%.
  • However,  highly unlikely that traders will  assume large directional bets ahead of today’s SARB  MPC meeting and US GDP  Q4.
  • TRADE : SELL USDZAR on rallies.

Expected Ranges:

  • USDZAR :  Expect a range 17.0300-17.1800
    • Importers 17.0800-17.0300
    • Exporters 17.1300-17.1800
  • EURZAR :  Expect a range of 18.6000-18.7500
    • Importers 18.6500-18.6000
    • Exporters 18.7000-18.7500
  • GBPZAR :  Expect a range of 21.0900-21.3300
    • Importers 21.1700-21.0900
    • Exporters 21.2500-21.3300


  • USDZAR 17.1000
  • EURZAR 18.6700
  • GBPZAR 21.2000


  • Law enforcement agencies averted a bloodbath between DA and ANC members in the Johannesburg CBD yesterday.
    • This after the official opposition’s failed bid to hand over a memorandum to Luthuli House, to demand an end to load shedding.
      • The drama unfolded early in the morning as hundreds of ANC Youth League (ANCYL) members descended on the governing party’s headquarters.
      • ANCYL members were seen armed with sjamboks, stones and other objects – saying they were guarding the building.
      • ANCYL formed a human chain outside Luthuli House aimed at preventing DA leader John Steenhuisen and thousands of his supporters from getting close to Luthuli house. IOL
  • Despite being prevented from getting close to Luthuli House, the DA believes the ANC received its message that citizens will no longer tolerate the governing party’s “manufactured electricity crisis”.
    • DA leader John Steenhuisen believes his party’s message, that South Africans’ level of tolerance towards “an ANC manufactured electricity crisis” had reached breaking point,
    • And it was heard loud and clear by the governing party.  NEWS24
  • More ESKOM woes
    • Eskom has implemented stage 5 power cuts on Thursday morning and will do so for the next 48 hours until 5am on Saturday morning.
    • The power utility said there’d been a further breakdown of a generation unit each at the Camden, Kendal, Lethabo and Majuba power stations.
    • From Eskom (image)

source: ESKOM


  • On Wednesday, the Dow inched up 0.03%, while the S&P 500 and Nasdaq Composite shed 0.02% and 0.18%, respectively.
    • US stock futures edged higher on Thursday after the major averages struggled for direction during Wednesday’s regular session,
    • as investors digested the latest batch of corporate earnings that were released after the bell.
  • US stocks initially sold off as a bleak outlook from Microsoft triggered a tech rout, before recovering towards the close as investors shifted their focus to other pockets of the market.
  • In extended trading, Tesla jumped 4.5% after the EV-maker’s fourth quarter earnings and revenue topped expectations.
    • Tesla just reported fourth-quarter earnings for 2022 including revenue of $24.32 billion, and earnings per share of $1.19.
      • Automotive revenue amounted to $21.3 billion in the three months ending 2022,
        • and included $324 million of deferred revenue related to the company’s driver assistance systems.
      • Other major brands like oil giant Chevron, clothing – Levi Strauss and Casino –  Las Vegas Sands also gained on upbeat quarterly results. CNBC


  • The yield on the US 10-year Treasury was lower and moved back to around 3.4%, close to levels not seen since September 2022.
    • Traders citing  mounting fears of a sharp economic downturn and prospects of a less aggressive Fed, increasing the appetite for government debt.
      • Data released Tuesday showed that US business activity contracted for the seventh straight month in January,
      • Traders betting that the data continues to worsen and showing that  the US economy may be moving closer to recession.

Money markets continue to price  the US FED will  hike rates by 25 basis points in February. Reuters


  • The Dow gained 9 points to 33,743
  • The SP500 flat at 4,016
  • The Nasdaq lower 20.92 points to 11,313


  • The US dollar remained 102 at 101.54 on Thursday.
    • The Buck  hovering near its lowest level in almost eight months, on the back of expectations of less aggressive policy tightening from the Federal Reserve.
    • The possibility of a looming recession also weighed on the currency.
      • Continued weakening of  US economic data and mixed corporate earnings suggested that the broader economy is facing headwinds.
    • Meanwhile, the country’s eased inflation bolstered bets that the Fed would further slow down its rate hikes.
    • Weighing on the currency remains comments by  Fed Governor,  Christopher Waller, who  said that upcoming moves and the forecasted decline in inflation brought policy close to being “sufficiently restrictive”.
    • Investors now look ahead today’s US  Q4 GDP growth rate durable goods and  the PCE price index. FX news
  • Asian markets were mixed ahead of the today’s US GDP report as well as a mixed showing on Wall street.
    • In Japan, the Nikkei 225 fell 0.12% to close at 27,363, snapping a four-day winning streak.
      • Investors turning cautious as the market becomes extended and as global economic uncertainties continue to weigh on sentiment.
      • Meanwhile, a summary of opinions from the Bank of Japan’s January meeting showed that policymakers debated the inflation outlook
      • As well as the prospect of a sustainable rise in wages, while emphasizing the need to keep monetary policy accommodative. 
    • In China, the Shanghai Composite rose 0.76% to close at 3,265, hitting their highest levels in four months.
      • This after the PBoC left its key lending rates unchanged for the 5th straight month.
      • Chinese authorities aimed to boost market confidence and provide support to the economy.
      • The benchmark indexes also posted their fourth straight weekly gain amid an improving economic outlook in China following its rapid dismantling of Covid curbs.  Reuters
  • US WTI crude futures traded above $80/bl on Thursday, attempting to recoup recent losses.
    • China demand recovery remains the key price drivers.
    • Traders citing hopes of continued demand recovery in top crude importer China and as well as a weaker US dollar made Dollar -priced commodities more attractive.
    • Also, Covid-related deaths and severe cases in China is now 70% lower than peak levels in early January.
      • All bolstering bets for further economic recovery.
      • A lower-than-expected rise in US crude inventories also lifted oil prices.
      • Meanwhile, OPEC is expected to maintain current oil production levels when they meet next, keeping supply tight. Gulf energy news
  • Gold continued its fine rise as it moved towards $1,950 /oz.
    • Bullion reaching its strongest levels in 9 months amid a general dollar weakness.
      • The softening of US economic data, mixed corporate earnings, and recent comments from Federal Reserve officials;
      • All signaled a less aggressive monetary tightening ahead.
    • Recall : Fed Governor Christopher Waller said that upcoming rate moves and an expected continued decline in inflation left policy “pretty close” to being “sufficiently restrictive”.
      • Gold traders took the comments in their stride as markets continue to look for a smaller 25 basis point rate hike at its Jan. 31-Feb. 1 policy meeting.
    • Investors now look ahead to the  US Q4 GDP growth rate, durable goods orders, the PCE price index.
    • Technically : gold remains firmly above the 200 day moving average . kitco metals report



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.