The Rand lost nearly 15 cents in thin Asian trading on the back of the Euro falling sharply through parity as Europe’s gas crises worsens.
Significant Market Data
- 11h30 : SA GDP Q2 : -0.5% expected QoQ vs +1.9% previous
- 11h30 : SA GDP Q2 +1% expected QoQ vs +3% previous
- 16h00 : US ISM NON MANUFACTURING 55.5 EXPECTED VS 56.7 PREVIOUS
- 08;00 SA FOREIGN RESERVES : +$59BN EXPECTED VS $59.15 PREVIOUS
- 15H10 : US FED CHAIR JAY POWELL SPEECH
- This morning after the 15 cents drop in Asia, due to the drop in the Euro, expect some early profit-taking in USDZAR.
- Exporters likely to step in and take advantage of attractive levels, and we could push towards the Asian session low of 17.2500.
- This would however allow for short term importers to exact a degree of covering.
- The ZAR however remains on the back foot and as mentioned the FED remains a risk.
- Tomorrows SA GDP likely to be supportive if it prints better than expected.
- The US jobs report, confirming 75 bps for September.
- NB: although SA data have been ZAR supportive of late i.e. Unemployment , Money Supply and dare I say higher inflation,
- As this would ensure action from the SARB as the theme remains the FED.
- This will continue to drive future price action.
- ZAR Bulls, with the ZAR stretched any positive moves could lead to real gains on a snap back in USDZAR.
- BUT : This will ONLY come from the FED.
- USDZAR : Expect a range 17.2500-17.5500
- Importers 17.3300-17.2500
- Exporters 17.4200-17.5500
- EURZAR : Expect a range of 17.0800-17.3500
- Importers 17.1300-17.0800
- Exporters 17.2400-17.3500
- GBPZAR : Expect a range of 19.7800-20.0700
- Importers 19.8600-19.7800
- Exporters 19.9900-20.0700
| OPENING RATES
- USDZAR 17.3900
- EURZAR 17.2000
- GBPZAR 19.9100
- Huge petrol price drop expected.
- After months of unbearable price hikes, the Central Energy Fund’s latest data predicts that 95-octane petrol is expected to decrease by around R2.35c.
- The Road Freight Association is one of several industries that have welcomed this week’s expected fuel price drop.
- For Gauteng residents, this means you could pay at least R23 per litre at the pumps, compared to the current R25.42c a litre. EWN news
- The President and his farm Phala-Phala once again the headlines with reports of the sale of 26 animals fetching R6.8 million at an auction.
- Recap: CR was accused by SA’s former spy chief Arthur Fraser of covering up the theft in 2020 of foreign exchange from the sale of animals at the Phala Phala Wildlife farm.
- The money was said to be hidden inside furniture at the ranch, about two hours north of the capital, Pretoria.
- Ramaphosa has denied wrongdoing and said he’s cooperating with investigators. NEWS24
- ESKOM and now Koeberg
- Nuclear power station Koeberg’s problematic Unit 2 tripped on Saturday morning, less than a month after it was plagued by mechanical issues and a delayed return to service.
- The SOE confirming the unit tripped from full power during a routine testing of the control rod.
- Global chip shortages hit SA motor vehicle manufacturing .
- The global shortage of semiconductor microchips, is likely to continue well into 2023, analysts say.
- The shortage have seen SA motor companies struggle to meet market demand,
- This despite frantic efforts by chip companies and governments to ease the crisis.
- Researchers saying, world vehicle production has been cut by at least 2-million units so far this year. Businessday Live
- US Markets are closed on Monday for the Labour Day holiday.
- On Friday, the Dow Jones fell over 300 points while the S&P 500 and the Nasdaq dropped 1.1% and 1.3%, respectively.
- Traders citing, the highly-anticipated jobs report failing to allay investors’ fears about Fed’s aggressive interest rate hikes.
- The NFP report showed that the US economy added jobs in line with expectations in August.
- Traders are still pricing in a 75bps rate hike in the fed funds rate this month.
- All sectors closed in the red, except energy shares, boosted by higher prices of crude oil.
- On the week, the Dow and S&P lost 3% and 3.3%, respectively, while the Nasdaq shed 4.2%, recording their third negative week in a row.
- The Dow declined 337 to 31,318
- The SP500 fell 42 to 3,924
- The Nasdaq lower by 154 to 11,630
- image : Trading Economics
- Asian markets trading mixed as traders digest Friday’s Jobs report as well as the Gazprom ramifications for financial markets.
- In Japan, the Nikkei 225 fell 0.11% to 27,620 and in turn closing at its lowest levels in a month.
- Traders saying the index tracking continued weakness on Wall Street. This after moderating US jobs growth failed to allay fears about further monetary tightening.
- Investors also assessed data showing Japan’s service sector contracted in August for the first time since March as fresh Covid-19 outbreaks weighed on demand.
- In Australia, the ASX 200 rose 0.34% to close at 6,852, after recovering slightly and helped by gains in energy and mining stocks.
- This after a rebound in commodity prices. Energy stocks led the gains as oil prices climbed ahead of an OPEC+ meeting.
- Investors are also preparing for the RBA ‘s (Reserve Bank of Australia) policy decision on Tuesday.
- The RBA is expected to deliver its fourth straight half percentage point rate hike to combat two-decade high inflation. Bloomberg
- Brent prices spike above $94/bl after Russia’s Gazprom stopped flows to mainland Europe, citing maintenance issues.
- The impact of the latest fallout from Europe’s worsening energy crisis supporting prices.
- OPEC+ cuts also supporting prices as it tries to combat potential “new” supply from Iran.
- However, demand concerns stopping a full out rally, due to anti-virus lockdowns in top importer China.
- Monetary tightening remains a worry as central bankers warn they are ok for a recession if it can bring prices under control.
- NB: Brent prices declined nearly 8% last week and are down about 25% since mid-June amid fears that tightening monetary conditions.
- Gold prices finding some support and even buying after Russian energy giant Gazprom PJSC halted its key gas pipeline to Germany.
- This after, on Friday, G7 leaders agreed to impose a price cap on Russian oil.
- Bullion trading around $1,710/oz at the time of writing.
- Also, traders reassessed the outlook for US interest rates following an “ in line “ jobs report.
- NFP rising +315k but unemployment higher at 3.7%, supporting Gold as yields drifted lower.
- Safe haven buying helping the yellow metal due to a deepening energy crisis in Europe that heightened recessionary risks.
- US Dollar shrugged off weaker / inline jobs report and fading yields after Russia Gazprom’s decision to halt flows of crucially needed Natural Gas to Europe.
- The dollar broke above 110 on Monday for the first time since June 2002.
- Traders citing a flight to safety, after Russia indefinitely shut a key gas pipeline to Europe on Friday.
- The Kremlin citing an oil leak in a turbine, notably only a few hours after G7 leaders agreed to impose a price cap on Russian oil.
- However, moderating US jobs growth failed to stop fears about the FOMC ’s aggressive plan to stamp out inflation.
- Markets continues to price for another 75 basis point rate increase this month.
Natural Gas crises
- European natural gas futures jumped almost 30% to approach €280 per megawatt hour on Monday.
- This after Russia’s Gazprom reversed its plan to resume flows through the Nord Stream pipeline and shut it indefinitely, citing maintenance requirements.
- The Nord Stream pipeline was already running at just 20% of capacity before flows were halted last week for a three-day maintenance period.
- Gazprom decision is set to deepen an ongoing energy crisis in Europe, with countries trying to find alternatives to Russian gas supply.
- This included LNG alternatives i.e. liquefied natural gas from the US.
- European Union ministers will have an emergency energy meeting this week to discuss the energy crisis and define special measures to fight rising costs. Reuters