The ZAR continued to weaken post the FOMC minutes as the Dollar advanced on the back of stronger than expected private payrolls numbers.
- The local unit trading as high as 17.3000, after reaching 16.7700 on Wednesday (pre-minutes).
- Yesterday, The ADP data showed a rise of 235k vs and an expected rise of 150k.
- Indicating a resilient labour market that supports the Fed’s hiking rhetoric.
- All of this leads us into today’s NFP report, where markets have priced for a 200k jobs rise. (A low number in our estimation)
- In addition jobless claims numbers also pointed to a still-tight US jobs market.
- A surprise to the upside likely to add momentum to the dollar rally and will likely fuel rate hike concerns.
- The dollar gained against most major currencies, while it also appreciated against emerging market currencies.
- The ZAR declining on the back of the US rate fears and the NFP report at 15h30 remains the major risk today.
- The risk off theme continued after the Dow declined 1.02%, the S&P 500 dropped 1.17% and the Nasdaq tumbled 1.47,
- As investors worry about tighter liquidity conditions in 2023.
- However, next week’s inflation print likely to be lower and we expect a stronger ZAR heading into the Q1 of 2023.
Trade: Levels above R17/$ remain good levels for exporters.
- This morning expect an early session pullback towards 17,1000, before more weakness into today’s NFP.