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Morning NOTE

4 November 2022


The ZAR weakened to 18.5000 after the FOMC rate decision before recovering to 18.3000 on the back of USA Risk rally.


The Rand traded weaker to reach on the 18.5000 on the back of rising US yields and the BOE hiking by 75 bps to bring UK rates to 3%.

  • The UK central Bank following major central banks with its largest rate hike in 33 years to combat UK inflation .
    • The BOE also saying further hikes will be needed to return inflation to target.
    • All of this resulted in a RISK-OFF session, before New York opened.
      • In New York, Treasury yields retreating from 4.20% to 4.13%, resulting in stocks finding a bottom as “bargain hunters”, stepped in.
      • The resulting early session rally in New York , slowing down the ZAR’s decline and also allowing the local unit to gain  % to open at 18.3100 this morning.
  • In all of this, the Dollar index once again gaining and moving back to 20 year high’s following the FED’s policy statement after its 75 bps hike.
    • Elsewhere , Turkey CPI hit 85% in October, a brutal reminder of what can happen if Central Bankers adopt a casual approach to fighting inflation.
  • Today, attention turns to the all important US JOBS REPORT i.e. NON-FARM PAYROLLS.

Significant Market Data:




  • We expect markets will react negatively or positively based on the data. (**expect a high degree of volatility).
    • Higher than expected likely to result in a RISK SELL OFF
      • And
    • Lower than expected likely to result in RISK RALLY .


  • The ZAR opening stronger on the back of an Asian Risk Rally.
    • Early on expect some USD LONG Liquidations to drive USDZAR lower,
      • Market makers likely to shake out weak stops and accumulate “cheap” dollars.
    • All of this resulting a in Risk on start to the day, and the ZAR benefitting from this sentiment.
    • Supporting the early rally , are news that China has moved away from its ZERO COVID Policy and likely to re-open.
    • The news sent stock prices  sharply higher in Asia.
    • The Hang Seng up more than 7% in early trading.


  • This afternoon we are once again faced with the all-important monthly  NON FARM PAYROLLS US JOBS REPORT.
    • Expected is +200k jobs.
    • And this likely to drive direction as we head into the New York session.
      • The Dollar index above 113 and US10YT rates at 4.13% , indicating a BID BIAS for the Dollar.
  • Trade:   BUY USDZAR on dips .

Expected Ranges

  • USDZAR :  Expect a range 18.1200-18.5400
    • Importers 18.2600-18.1200
    • Exporters 18.4000-18.5400
  • EURZAR :  Expect a range of 17.7700-18.0200
    • Importers 17.8800-17.7700
    • Exporters 17.9500-18.0200
  • GBPZAR :  Expect a range of 20.3800-20.6800
    • Importers 20.4800-20.3800
    • Exporters 20.5800-20.6800


  • USDZAR 18.3100
  • EURZAR 17.9300
  • GBPZAR 20.5200


  • SA’s neutrality in Ukraine war questioned as it joins Russian naval exercises.
    • With South Africa deciding to conduct joint naval exercises with Russia, there are serious questions about this country’s neutrality regarding the war in Ukraine.
    • The US, Britain and other European nations have been providing advanced military equipment to Ukraine to fend off the Russian invasion.
    • But instead, South Africa has refused to institute sanctions and has continued its cooperation with Russia. EWN
  • Ramaphosa made another return to Parliament on Thursday after his appearances in September.
    • The president faced several questions about key state entities, like SAA and Eskom, which has been struggling with rolling blackouts for the last month.
    • President Ramaphosa tried to ease the concerns of MP on both Eskom and SAA, which are both on the brink of collapse.
      • The president said that there were positives within Eskom though.
      • He said that the intervention of Treasury in taking up a portion of Eskom’s debt was already showing positive signs. News24
  • The DA wants to know why there was no tender process for contracts worth R381 million awarded to the nephew, by marriage, of President Cyril Ramaphosa.
    • The Presidency has denied that President Ramaphosa is involved with Maumela in any way.
    • However, the DA’s Jack Bloom refutes this. He said the company was clearly not compliant and not registered with the SAHPRA.
    • And he added, you can’t sell medical products legally unless you registered with Saphra,” Bloom said. Iol


  • On  Thursday, the Dow fell 0.46%, the S&P 500 lost 1.06% and the Nasdaq Composite dropped 1.73%, with US stocks sliding for the fourth straight day.
    • Those moves came as investors continued to grapple with hawkish signals from the Federal Reserve.
    • The October, non-farms jobs report on Friday could signal how the economy has been holding up so far, and how much work the Fed has ahead of it to bring down inflation.
  • US stock futures rose on Friday as investors prepared for a key US jobs report that could offer fresh clues on the pace of future rate hikes from the Federal Reserve.
    • Futures contracts tied to the three major indexes were all trading in positive territory.


  • The US 10-year yield, traded at 4.15% and once again approaching a 15-year peak of 4.3% hit in late October.
    • Investors citing persistent worries about inflation and fears that the Federal Reserve would need to stay aggressive dented appetite for debt.
      • The FOMC delivered a widely expected 75 bps hike on Wednesday while flagging a longer monetary tightening path as the central bank seeks to bring down inflation to its 2% target.
    • Now all eyes turn to October non-farm payrolls and unemployment rate data, due on Friday, or more clues on future interest rate hikes.
      • Meantime, Germany’s 10-year Bund yield, the European benchmark, rose to as high as 2.2%, closing in on its highest level since August 2011.
      • In addition UK rates were hiked by 75bps , the highest such hike in 33 years  as the BOE steps up its efforts to combat inflation.  Bloomberg


  • The Dow  declined 146 to 32,001
  • The SP500 fell 39 to 3,719
  • The Nasdaq fell 181 to 10,342


  • Asian markets mostly rose on Friday, with Hong Kong and China stocks leading the advance as investors continued to look for signs that China will dial back its zero-Covid strategy.
    • Shares in Australia and South Korea also eked out small gains, while Japanese stocks caught up with post-Fed declines after Thursday’s holiday, and traded lower.
  • In Japan, the Nikkei 225 fell 1.68% to close at 27,200 ( after their holiday), tracking global peers lower as the US Fed indicated a more hawkish stance than markets anticipated.
    • Investors also cautiously awaited another batch of corporate earnings reports, as the third quarter earnings season has so far yielded mixed results.
    • Technology stocks led the market lower, with sharp losses from SoftBank Group (-2.2%),
    • Focus also turning to the US jobs report later this afternoon that will once again increase volatility.
  • In Australia markets rebounded following “China’s re-opening” .
    • The ASX 200 rose 0.5% to close at 6,893 on Friday, reversing losses from earlier in the session.
    • Energy and mining stocks leading the advance on firmer commodity prices.
    • Investors also continued to assess hawkish signals from the US Federal Reserve ahead of a key monthly US jobs report.
    • Energy firms rallied as oil prices rebounded, with sector leaders Woodside Energy and Santos rising 3.9% and 2.3%, respectively.  Reuters
  • US Dollars steadied just below 113, consolidating recent gains on expectations that US rates could peak higher than previously anticipated.
    • After the FOMC delivered its 4th straight 75 basis point rate hike on Wednesday, Jerome Powell said that rates have yet to be “sufficiently restrictive” and that it is “premature to discuss pausing.”
      • However, Powell added that a slower pace of rate increases could soon be appropriate.
      • Markets are now betting on a terminal rate of about 5.15% by June next year.
      • The US economy’s remarkable resilience also supported the dollar despite some sectoral slowdowns.
      • Traders now turn their attention to the nonfarm payrolls report due later today that could offer fresh clues on the pace of future rate hikes from the Fed. Fx NEWS
  • Brent crude futures traded above $96/bl on Friday, erasing losses from the previous session and heading toward the highest levels in over three weeks.
    • China’s re-opening a major factor, as a tightening supply outlook outweighed fears of a global economic slowdown.
      • Investors fretted about tight oil markets ahead of winter, with OPEC+ implementing large output cuts from this month.
      • Also, the European Union ban on Russian oil is set to take effect in December.
    • The Fed, ECB and BOE all delivering a supersized 75 basis point rate hike in their latest policy meetings.
      • Analysts warned about the economic risks of rapid rate rises that could take a toll on energy demand.
      • A strong dollar also pressured oil prices. Gulf Energy News
  • Gold prices stabilized near $1,640 /oz, but remained under pressure from a strong dollar and Treasury yields after the US FED leaned towards a more hawkish stance than markets anticipated.
    • After the Fed delivered its fourth straight 75 basis point rate hike on Wednesday, Fed Chair Jerome Powell said that rates have yet to be “sufficiently restrictive” and that it is “premature to discuss pausing.”
    • However, Powell added that a slower pace of rate increases could soon be appropriate.
    • The Bank of England also implemented its first three quarters of a percentage point rate hike since 1989 on Thursday.
    • Investors now look ahead to a key US jobs report on Friday that could guide the rates outlook. Kitco metals


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