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Morning NOTE

6 September 2022


The ZAR gained more than 2% on Monday on the back of Exporters banking profits in a thin liquidity environment due to the US labour day holiday.


  • The Rand recovered most of  late last week’s losses to reach 17.0500 in Asian trading.
    • The US labour day holiday as well as the low volume trading conditions exacerbated the move.
  • Monday, although a US holiday, was not without incident.
    • And OPEC +  cut oil production, as it tries to keep prices elevated ahead of a “likely” global economic recession, on the back of global “tightening” monetary policy.
    • The UK has a new Prime Minister, with  Liz Truss, replacing Boris Johnson.
    • Central banks remain committed to fight inflation and this was once again illustrated after the RBA (Reserve Bank of Australia) raised rated by 50bps to 2.35%.
      • Policymakers reiterated that they expect to increase interest rates further over the months ahead,
        • but the RBA is not on a pre-set path as the size and timing will be guided by the incoming data. 
      • The RBA noted, it  was seeking to bring inflation down to the 2–3% range while keeping the economy from falling into a recession.

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




  • 14h15 : ECB RATE DECISION 


  • This morning we opening off the strongest levels of 17.0500, to start the session at 17.1300.
  • Yesterday’s move happened during low volumes with New York out, and we can expect some profit taking and a weaker ZAR early on.
    • The ZAR tracking EURUSD in the absence of US markets.
    • After EURUSD fell hard due to the Russian suspension of NG flows to Europe, the single currency found a bid ahead of this week’s ECB meeting.
    • The uncertainty around the, ECB rate decision likely to cause more volatility in the market.
    • Expectations ranging from 50, 75 to even 100 bps.
  • In the absence of any bearish news, expect some ZAR gains, however SA’s GDP likely to be a driver this today.  
    • Medium term markets are looking ahead to the FED in September and this will continue to determine the directional bias for the local unit.
  • 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. 

Expected Ranges

  • USDZAR :  Expect a range 16.9200-17.3000
    • Importers 17.0500-16.9200
    • Exporters 17.1800-17.3000
  • EURZAR :  Expect a range of 16.9500-17.2100
    • Importers 17.0000-16.9500
    • Exporters 17.1100-17.2100
  • GBPZAR :  Expect a range of 19.7300-19.9200
    • Importers 19.7800-19.7300
    • Exporters  19.8700-19.9200


  • USDZAR 17.1300
  • EURZAR 17.0500
  • GBPZAR 19.8200


  • Limpopo ANC endorsed Ramaphosa, for a second term and it recommended Mashatile for the deputy position.   
    • A statement by the party’s provincial executive committee, also proposes that its current chair Stanley Mathabatha be elected as ANC national chairperson
    • Northwest also backed CR for a second term,
      • but the final decision rested with the branches of who would represent the North West in the national elective conference in December. NEWS24
  • However, more details continue to emerge Phala Phala
    • Cyril Ramaphosa’s responses to the Public Protector reveal the president knew about the $580 000 in cash for more than a month before it was stolen.
      • This likely to draw more questions from opposition parties as to what the extent of the theft was and how much the President actually knew. EWN
  • SA’s biggest grocer Shoprite is paying out a record R3.54 billion to shareholder for its 2022 year.
    • The group rebound in liquor sales and a strong performance from its core domestic supermarkets business helped lift profits by over a 20%.
    • Merchandise sales grew 9.6% to R184 billion in the year to 3 July and profits jumped 21.5% to R5.73 billion.
    • Shoprite said on Tuesday, also reporting R6.2 billon worth of market share gains for its SA business. Moneyweb
  • The SARB likely to raise interest rates for South Africans, and first-time homeowners may be under more pressure than others.
    • Rates likely to reach prime of 10%, i.e. pre-covid levels.
    • The next announcement by the Monetary Policy Committee (MPC) will be on September 22, and rates could increase by as much as 0.5% – maybe even more. Moneyweb


  • US stock futures rose on Tuesday as traders kicked off a holiday-shortened week.
    • Dow futures were up 0.7%, S&P 500 futures gained 0.8% and Nasdaq 100 futures jumped 1%.
    • Last week, saw losses on Friday, while the tech-heavy Nasdaq Composite lost 1.31%, with all three benchmarks closing out their third straight week of losses.
    • Traders are also monitoring energy prices as a deepening energy crisis in Europe following news that Russia would halt gas flows to Germany.


  • US 10 Year Yield remained above 3.2% ahead of Jay Powell’s speech on Thursday and the next Fed meeting.
    • Traders widely expecting a 75 bps rate hike at the next FOMC.
  • Europe, the yield on the German 10-year Bund rose further to above the 1.6% mark in September.
    • This after annual inflation in the bloc hit another fresh high of 9.1% in August, above market forecasts, while surging energy costs also pressured domestic prices to remain soaring.
    • ECB policymakers consider a 75bps rate hike for their next meeting, citing elevated risks that inflation will become entrenched in expectations.
    • It was  the highest in two months, amid growing expectations of aggressive rate hikes by major central banks.




  • Asian markets mixed after a holiday in New York yesterday.

    • In Japan, the Nikkei 225 flat lined with a small gain 0.02% to 27,626, as investors stayed on the side-lines amid a lack of market moving catalysts.
      • Investors are also looking ahead to speeches from Federal Reserve officials and policy decisions from other major central banks this week.
      • Meanwhile, Japanese Finance Minister Shunichi Suzuki commented on sharp yen moves on Tuesday,
        • saying heightened volatility was “undesirable” and that he was watching currency markets with a “great sense of urgency.”
    • In Australia, the ASX 200 Index fell 0.38% to 6,827 on Tuesday, reversing gains from earlier in the session and closing at its lowest level in over a month.
      • The Reserve Bank of Australia raised its policy rate by 50 basis points to 2.35% and signalled further tightening to bring inflation under control.
      • However, analysts noted that the RBA dropped a reference to “normalising” policy suggesting rates were getting closer to what the central bank considered neutral levels.  Reuter
  • Crude oil declined toward $88/bl after gaining more than 2% in the previous session. Traders weighed the impact of a modest output cut by OPEC+ and the potential for further action from the group.
    • OPEC and its allies including Russia agreed to reduce output by 100,000 barrels a day from October, amounting to roughly 0.1% of global demand, to deal with macroeconomic headwinds.
      • It was also to counter a potential supply boost from Iran.
      • Saudi Arabia also said OPEC+ was willing to take further steps to support the global oil market if necessary.
    • Meanwhile, oil prices remain about 30% down since early June as tightening monetary conditions and recession fears continued to grip commodity markets. Gulf Energy news
  • Gold prices increased above $1,710/oz, recouping some losses after sliding for the past three weeks.
    • The dollar’s relentless rally took a breather as traders took some profits and awaited speeches from Federal Reserve officials and policy decisions from other major central banks this week.
    • A deepening energy crisis in Europe following news that gas flows through the key Nord Stream 1 pipeline would not resume also reignited recession fears, pushing investors to rush for safer assets.
    • However Bullion, is likely to remain under pressure as the Federal Reserve is expected to push ahead with aggressive interest rate hikes to combat high inflation.  Kitco metals  
  • The US Dollar steadied around 109.5 on Tuesday after pulling back from a two-decade high of 110.3 reached in the previous session.
    • Traders took some profits and awaited speeches from Federal Reserve officials for more clues on the central bank’s rate hike path.
      • Investors also turned cautious ahead of the European Central Bank’s rate decision later in the week.
    • Economists widely expecting the ECB to deliver a 75 basis point increase to combat inflation despite pressure from a worsening energy crisis.
      • Meanwhile, the Dollar remains strong as the Fed signalled that it would prioritize the fight against inflation over growth concerns.
      • Markets continued to price in 75 basis point rate increase this month.  FX news

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