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
- 16h00 : US ISM NON MANUFACTURING 55.5 EXPECTED VS 56.7 PREVIOUS
- 08;00 SA FOREIGN RESERVES : +$59BN EXPECTED VS $59.15 PREVIOUS
- 14h15 : ECB RATE DECISION
- 15H10 : US FED CHAIR JAY POWELL SPEECH
- 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.
- 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
| OPENING RATES
- 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.
- NO TRADING DUE TO US HOLIDAY