The ZAR continued to trade in wide ranges caused by 2 factors, primarily Cyril Ramaphosa and the US Jobs report.
The Rand continued to whipsaw and managed to open 30 cents stronger at 17.3000 in early Joburg trading.
- The local unit gapping stronger after reports emerged on the weekend that Ramaphosa will not resign and will fight the Section 89 report.
- Ramaphosa emboldened by his ANC NEC colleagues who are now casting doubt on the legitimacy of the report,
- Earlier the ANC NWC resolved NOT to adopt the section 89 panel report, ensuring CR will continue in his role.
- This implies CR will survive until the ANC Leadership conference and likely continue to lead the executive.
- Markets for now reacting positively with a stronger ZAR.
- On Friday, the US jobs report surprised to the upside with +263,000 new jobs created with an expectancy of +200,000.
- It is the lowest job gain since April last year, as the jobs market appears to be normalizing after the pandemic shock.
- However, it continues to signal a healthy and tight market, above the pre-pandemic average of 150K-200K jobs created per month.
- The US 10YT spiked to above 3.60% on the data allowing for rebound in the US Dollar.
- The ZAR jumped to 17.5500 on the news before Ramaphosa news allowed for a sharp gain in early trading.
Significant Market Data:
- 17h00 : US ISM NON-MANUFACTURING PMI’S FOR NOVEMBER +53.1 EXPECTED VS 54.4 PREVIOUS
- 17H00 : US FACTORY ORDERS FOR OCTOBER +0.7% EXPECTED VS +0.3%
- 11h30 : SA GDP GROWTH Q3 YOY +0.4% EXPECTED VS 0.2% PREVIOUS
- 12h00 : EU GDP GROWTH Q3 TOT +1.7% EXPECTED VS 2.7% PREVIOUS
- 11h00 : SA CURRENT ACCOUNT Q3 R-140BN EXPECTED VS -R87BN PREVIOUS
- 13H00: SA MANUFACTURING OCTOBER YOY -1.7% VS +2.9% PREVIOUS
- 15H30 : US PPI NOVEMBER YOY +7.2% EXPECTED VS 8% PREVIOUS
- 17H00 : US MICHIGAN CONSUMER SENTIMENT 57 EXPECTED VS 56.8 PREVIOUS
- The ZAR opened stronger on back of reports that Ramphosa will fight the Section 89 report.
- Ramaphosa cancelled his scheduled press conference and appears to have gained support from ANC MP’s and branches.
- The NEC continues to deliberate over his future, but it appears that CR has enough support to survive.
- The ZAR operating on “less uncertainty” is a good thing, reacted positively to open nearly 30 cents stronger.
- The local unit opening at 17.3000.
- The ZAR also gaining against a Dollar, that remains on the back-foot as yields continue to drop.
- Following news that the Fed indicated a slower path for rate increases.
- This morning we expecting a some early ZAR weakness on the back of short term profit taking
- But the theme will remain “ RANGE TRADING”
- Traders nervously awaiting decisions surround CR’s future.
- For now it appears that Ramaphosa will remain in place, at least until the ANC 55th leadership conference in 10 days time.
- This will be ZAR supportive.
- Event risk : CR’s announcement.
- Trade the range : SELL DOLLARS NEAR 17.50000
- AND BUY USD BELOW 17.2000
- USDZAR : Expect a range 17.1400-17.5300
- Importers 17.2700-17.1400
- Exporters 17.4000-17.5300
- EURZAR : Expect a range of 18.1100-18.4200
- Importers 18.2200-18.1100
- Exporters 18.3100-18.4200
- GBPZAR : Expect a range of 21.1100-21.500
- Importers 21.2400-21.1100
- Exporters 21.3700-21.5000
- USDZAR 17.3000
- EURZAR 18.2700
- GBPZAR 21.3000
- In what appears to be a stay of execution it appears that Cyril Ramaphosa might survive the Section 89 report.
- The ANC’s NEC council said ANC MP’s must reject the report as a clear sign CR has the numbers to survive any impeachment process.
- With the Phala-Phala hanging over the country and the ANC only 10 days away from electing new leadership,
- Many have come out in support of the current president.
- However, the NEC will on Monday deliberate on Ramaphosa’s future following the release of Parliament’s Section 89 panel’s report on the Phala Phala saga.
- Zweli Mkhize appears to have picked up the support of the ANC youth league/
- In a speech addressing the current Ramaphosa report and section 89, the former health minister said
- There are favourites in the party that are protected when fingered for wrongdoing.
- Mkhize appears to be Ramphosa’s strongest challenger at the upcoming leadership conference. NEWS24
- As the ANC NEC gathers around to protect Ramaphosa and casting doubt on the Section 89 report, opposition parties continue to voice their disapproval.
- After the DA voiced their disapproval ,
- The EFF deputy president Floyd Shivambu said the removal of Cyril Ramaphosa would not throw the country into disarray, as he is no longer fit to stay on as president.
- Shivambu was responding to comments made by the ANC’s Gwede Mantashe on Friday, who said the country and the ANC would be plunged into chaos should Ramaphosa step down. EWN
- US stock futures eased on Monday as the market entered a quiet period ahead of the Federal Reserve’s December policy meeting.
- Traders continue to wait for more US data to gauge the health of the economy.
- In regular trading on Friday, the Dow rose 0.1%, while the S&P 500 and Nasdaq declined 0.12% and 0.18%, respectively.
- The market recovering after earlier losses triggered by a stronger-than-expected November jobs report.
- Meanwhile, expectations that the Fed will slow the pace of interest rate hikes starting this month remained intact, with Fed Chair Jerome Powell expressing support for such a move.
- Investors now look ahead to more US economic reports this week including services activity, consumer sentiment and producer inflation data.
- The US 10-year yield rose above the 3.6%, as a stronger-than-expected US jobs report added to Federal Reserve’s leeway to continue tightening monetary policy.
- The US economy added a net 263 thousand jobs during November, well above market forecasts of 200 thousand and showing further evidence that the labor market remains tight.
- However, US bond yields remained lower for the week after Fed Chairman Powell said that it may be appropriate to slow the pace of interest rate increases .
- This as there are recent data points to a slowdown in the US economy.
- The Dow gained 34 points to 34,429
- The SP500 fell 4.87 to 4,071
- The Nasdaq declined 20 points to 11,461
Asian markets mixed as market try to digest last weeks stronger than expected US Jobs report.
- In Japan, the Nikkei 225 rose 0.15% to close at 27,820, with investors turning cautious as the market entered a quiet period ahead of the US Federal Reserve’s December policy meeting.
- Investors also digested a stronger-than-expected US jobs report released on Friday,
- though expectations that the Fed will slow the pace of interest rate hikes remained intact.
- Domestically, a top Japanese official said on Sunday that Japan should put off raising capital gains tax to avoid sending the wrong message as the country aims to encourage financial investment.
- In China,
- The Shanghai index jumped 1.76% to close at an 11-week high of 3,212, extending last week’s rally as China continued to shift away from strict Covid restrictions.
- In the latest developments, the major Chinese cities of Shanghai and Hangzhou scrapped testing requirements to enter public venues or use public transportation.
- It was joining other metropolises in relaxing virus curbs that have weighed on the economy and caused public outcry. Reuters
- The US dollar fell toward 104 on Monday, sliding for the fourth straight session as China’s policy shift on its Covid response boosted risk assets at the expense of the greenback.
- Investors also shook off a stronger-than-anticipated US jobs report as expectations that the Federal Reserve will slow the pace of interest rate hikes starting this month remained intact.
- Earlier Fed Chair Jerome Powell expressing support for such a move.
- The US economy added 263K jobs in November, higher than market forecasts for a 200K increase and following an upwardly revised 284K additions in October.
- Investors now look ahead to more US economic reports this week including
- services activity,
- consumer sentiment and
- producer inflation data,
- as well as consumer inflation data next week.
- The Fed is also scheduled to meet next week, where it is expected to deliver a smaller 50 basis point rate hike after raising interest rates by 75 basis points in the past four meetings. FX news
- Brent crude oil rose above $87/ bl on Monday after OPEC+ decided to maintain production at current levels as more Western sanctions on Russian oil are set to kick in.
- Also the relaxing of Covid laws in China improved the demand outlook.
- OPEC+ decided to stick to their existing policy of reducing oil output by 2 million barrels a day from November through 2023.
- The European Union is set to ban most seaborne Russian oil imports from Monday, while the G7 agreed to impose a cap of $60 per barrel on Russian crude. Gulf Energy report
- Gold traded above $1,800/oz, hitting its highest levels in five months as the dollar continued to decline, making greenback-priced bullion more attractive for buyers holding other currencies.
- The metal came under pressure on Friday on hotter-than-expected US jobs data.
- However, prices have since rebounded as expectations that the FED will slow the pace of interest rate hikes starting this month remained intact.
- China’s continuing shift away from strict Covid restrictions also boosted risk sentiment and weighed on the dollar.
- Investors now look ahead to a slew of US economic reports such as services activity, consumer sentiment and inflation data, as well as the Fed’s monetary decision next week. Kitco metals report