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Morning NOTE

3 February 2023


The ZAR consolidated near the strongest end of its range, after the local unit gained nearly 3.3% from the its lows on Tuesday.

The Rand continued to trade on the front foot, reaching a strongest level of 16.9300 before the ECB and BOE rate announcement.

  • The local losing some ground on the back of some profit taking after both the BOE and ECB raised rates by 50 bps.
  • The European Central Bank lifting its  main refinancing rate  to 3.0%, pushing up borrowing costs to the highest level since 2008,
    • The Bank also pledging to deliver another 50 bps rate hike at its next monetary policy meeting in March.
  • In addition, The Bank of England voted by a majority of 7-2 to raise interest rates by 50 basis points to 4.0 % pushing the cost of borrowing to the highest level since 2008.
    • It was the 10th consecutive rate hike amid policymakers’ efforts to combat high inflation and despite the risks of an expected economic recession this year.
    • BUT…the central bank dropped its pledge to keep increasing rates “forcefully” if needed and said inflation had probably peaked,
      • suggesting it might start reducing the pace of rate increases soon.
  • The BOE and ECB following the route of the Fed, although consensus appears inflation might be cooling, given the BOE statements.
    • Global RISK SENTIMENT firmly positive, as the SP500 extended its January rally as the broader index reached 4195.
  • The dollar recovered from its early lows to reach 101.81 to after hawkish comments from the BOE/ECB.
    • The buck off its lows ahead of today’s non-farm payrolls with a market expectation of +185k.
    • Investors now look ahead to the monthly US jobs report on Friday for clues about the state of the economy
  • The Rand following global risk sentiment and this likely to continue , as global inflation cools in 2023.
    • The result will be  Central banks taking their foot of the rates pedal.

Data this week



Market Movement Today:

The Rand continued to trade stronger and the local unit breached 17.0000 to reach 16.9300.

  • This morning we opening at 17.10000, on the back of early session profit-taking.
    • Traders booking profits ahead of another NON FARM PAYROLLS report.
    • Market expectation is for 185,0000 and a better than expected number could result in some Dollar Buying.
      • The US 10YT AT 3.38%
  • Overall, inflation appears to be trending downwards and this will likely be the dominating theme in 2023.
    • Lower rates in the world’s largest economies, likely to be risk asset supportive and the ZAR WILL BENEFIT FROM THIS.
  • Early this morning we expect some early profit taking as traders book some PL on their Dollar shorts and also ahead of JOBS REPORT at 15h30 this afternoon.
  • A break back into Monday’s low of 17.1000 could see a stop-hunt rally towards 17.2000
    • This would be good levels to SELL DOLLARS.
  • TRADE :  SELL USDZAR on rallies .

Expected Ranges:

  • USDZAR :  Expect a range 16.8800-17.2400
    • Importers 17.0000-16.8800
    • Exporters 17.1200-17.2400
  • EURZAR :  Expect a range of 18.4600-18.7600
    • Importers 18.5600-18.4600
    • Exporters 18.6600-18.7600
  • GBPZAR :  Expect a range of 20.7400-20.980
    • Importers 20.8200-20.7400
    • Exporters 20.9000-20.9800


  • USDZAR 17.0800
  • EURZAR 18.6100
  • GBPZAR 20.8700


  • Eskom search for a new CEO continues.
    • As load shedding remains part of the daily lives of South Africans, Eskom’s board says the process of finding a new chief executive officer (CEO) is well under way.
    • Current CEO André de Ruyter announced his resignation in December, and will be stepping down officially from April.
    • Speaking at a media briefing on Thursday evening, the board’s Mteto Nyathi said the nominations committee should have a list of possible candidates quite soon. 
  • Coal remains KING IN SA.
    • Deputy Minister of Mineral Resources and Energy (DMRE), says “coal is king” and remains critical for the country’s energy security.
    • She said Eskom still relied heavily on coal to generate power even as the country embarks on its “just transition” to cleaner energy.
    • Nkabane was addressing the annual Southern African Coal Conference in Cape Town on Thursday, attended by various players in the international coal and energy sector.
  • SA Tourism acting CEO Themba Khumalo told the media on Thursday that no agencies were involved as middlemen in the almost R1 billion Tottenham Hotspur campaign.
    • The Daily Maverick has reported on another twist in the saga of SA Tourism’s nearly R1 billion investment in Tottenham Hotspur, following the marketing agency’s defence of its decision.
    • It said that interim CFO Johan van der Walt admitted to having ties to the agency named in original documents relating to the campaign.
    • The agency, WWP Group, was reportedly being paid for facilitating the campaign. EWN


  • On Thursday, the Dow lost 0.11%, while the S&P 500 and Nasdaq rallied 1.47% and 3.25%, respectively.
    • Interest rate-sensitive technology stocks outperformed the market amid expectations that the Federal Reserve’s tightening cycle may be nearing its peak.
      • Investors now look ahead to the monthly US jobs report on Friday for clues about the state of the economy.
      • Futures contracts trading lower after the New York close,
    • This after Apple and Alphabet both tumbled more than 3% on weaker-than-expected quarterly results.
      • Amazon lost nearly 5% despite beating revenue estimates.  CNBC


  • The yield on the US 10-year, seen as a proxy for global borrowing costs, bottomed around 3.4%.
  • Yields lower and close to levels not seen since September 2022.
    • Investors reassessed the Federal Reserve’s plans for rate hikes after the world’s most influential central bank raised interest rates by 25 basis points, a less aggressive move than before.
  • Traders taking this as a clues that inflation is on a downward trajectory.
    • However, despite Fed Chair Powell’s overall dovish tone, he still sees ongoing increases in the target range appropriate to attain a stance of monetary policy that is sufficiently restrictive to return inflation to 2%.
  • Wall Street betting on a rate cut later this year while the latter reaffirmed its view that interest rates will stay higher for longer. Reuters


  • The Dow fell 39 points to 34,053
  • The SP500 gained 60 to 4,179
  • The Nasdaq  added 384 to 12,200


  • The US dollar recovered above 102 after hitting a nine-month low of 100.82 on Thursday.
    • Traders took dovish hints from the European Central Bank and the Bank of England who said inflationary pressures in their economies have become less intense.
      • But, the Dollar  remains down more than 10% from its September peak as the FOMC delivered a smaller 25 basis point rate hike in a widely expected move.
    • Fed Chair Jerome Powell said that the “disinflationary process has started.”
      • Still, the central bank signaled more rate increases ahead, but Powell’s remarks ignited hopes that this tightening cycle may be nearing its end.
      • Investors now look ahead to the monthly US jobs report on Friday for clues about the state of the economy.  FX news

Asian markets

  • In Japan, the Nikkei 225 rose 0.39%% to close at 27,509, with the index reaching seven-week highs as Japanese technology stocks tracked their US peers higher.
    • All this on the back of expectations that the Federal Reserve’s tightening cycle may be nearing its peak.
    • Promises of lower rates supporting rate sensitive stocks.
  • WTI crude oil below $76/bl on Friday and were headed for a second weekly decline amid lingering uncertainties about China’s demand recovery and as US stockpiles continued to rise.
    • The boost to commodities from China’s reopening started to fade as the timing and degree of the country’s economic recovery remains highly uncertain,
      • though analysts are confident that Asia’s largest economy will bounce back this year.
      • Latest data also showed that US crude inventories increased for a sixth week and expanded much more than expected.
      • Moreover, robust Russian crude exports amid strong demand from Asia and mounting fears of a global economic slowdown added to the bearish case for oil. Gulf Energy news
  • Gold dropped sharply to trade near $1900/oz.
    • Bullion consolidating near $1,915 /oz after a sharp selloff in the previous session.
    • Investors reassessed the outlook for inflation, growth and monetary policy worldwide.
    • On Thursday, the metal dropped nearly 2% from nine-month highs as investors took some profits off the table following a rally driven by expectations of less aggressive central bank policy tightening.
    • Investors now look ahead to the monthly US jobs report on Friday that could guide the rates outlook.
    • Gold is highly sensitive to the rates outlook as higher interest rates raise the opportunity cost of holding non-yielding bullion. Kitco metals report

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