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Morning NOTE

6 January 2023


Summary :

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.

Opening rates
USDZAR 17.18000
EURZAR 18.0800
GBPZAR  20.4800

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