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Morning NOTE

7 October 2022


The ZAR weakened to 18.0100 on the back of Risk aversion as traders exited Dollar “shorts” ahead of today’s NFP report.


The Rand weakened on the back of risk aversion, with the local unit losing ground vs the Dollar ahead of the all important US jobs report today.

  • The ZAR losing 2.56% since printing 17.5500 on Tuesday.
  • Mixed US data have spooked investors and Risk have been on the  backfoot on Wednesday and Thursday. 
  • The US NFP (Non-farm payrolls) reported is expected to show the US economy added 250k in September .
    • A matching or higher number will be Risk negative (i.e. emboldens the FED with its ultra-hawkish monetary policy stance)
    • And likewise, a Payrolls miss i.e. lower than expected will likely be Risk positive ,
      • with markets betting the FED will be forced to slow down, due to a slowdown in the jobs market.
  • Up to now FED officials been talking a HAWKISH BOOK, but many have also said they will let the data guide them.
  • The US 10YT at 3.82% , once again rising towards 4% ahead of the jobs data.
  • Mixed  data this week not helping investors, with weaker ISM manufacturing supporting the RISK rally,
  • But stronger than expected ISM services, causing another RISK OFF session, resulting in markets undecided ahead of the NFP.
  • The SP500 retreating to 3735 and EMFX like the ZAR also weaker , with  the local unit breaching the 18.0000 level once again.
  • Local data, dominated by ESKOM and now Rand WATER, BUT For now investors focusing on the FED and ignoring internal SA factors.

Significant Market Data





  • The ZAR retreated further, reaching 18.0100 on the back of fears of an over aggressive FED ahead of the payrolls data.
    • FED officials continue to warn markets they are solely focused on bringing down inflation, even at the expense of growth .
    • The resulting comments spooking markets, sending the Dollar higher across the board.
    • Equity markets also reversed recent gains and the ZAR and EMFX suffered against the Buck .
  • Yesterday, the Dollar’s advance surprising many ahead of the key NFP , with markets generally on edge ahead of today’s report.
  • We are also opening near the upper edge of the range, implying a market with a lot more certainty ,
    • NB: this could all be undone by the data later today.
    • Any print above 250k likely to cause a Dollar rally, and below a Dollar sell-off for ZAR gains.
  • After yesterday’s Dollar rally, we expect some early morning profit-taking as exporters step in to take advantage of elevated levels.
    • A dip towards the Asian low of 17.9200-17.9000 , would then become Dollar support and we expect the market to trend higher until the NFP release. 
  • Due to the sensitive nature of today’s report we advise clients ,
    • both exporters and importers , to cover at least 50% of short term exposures before the number.

Expected Ranges

  • USDZAR :  Expect a range 17.8200-18.1000
    • Importers 17.9200-17.8200
    • Exporters 18.0100-18.1000
  •  EURZAR :  Expect a range of 17.4400-17.7400
    • Importers 17.5400-17.4400
    • Exporters 17.6400-17.7400
  •  GBPZAR :  Expect a range of 19.7300-20.3300
    • Importers 19.9300-19.7300
    • Exporters 20.1300-20.3300


  • USDZAR 17.9600
  • EURZAR 17.6200
  • GBPZAR 20.0800


  • Transnet declared force majeure at its ports on Thursday, according to a document seen by Reuters, as workers began an open-ended strike over wages.
    • Force majeure is when “ unforeseeable circumstances prevent someone from fulfilling a contract”.
    • Transnet operates SA’s freight rail network and all the country’s ports.
      • It said the strike action would have a profound impact on economic activity across all sectors.
      • It urged workers to consider the long-term consequences of the strike on themselves and the economy as a whole. EWN
  • Heat wave and power outages hit Joburg water supplies
    • Residents across large swathes of the city and as far as Tshwane report interrupted water supplies.
    • A week ago Rand Water reported a power failure in the engine room at its Zuikerbosch Water Treatment Works.
      • The treatment plant supplies water to the Eikenhof and Mapleton booster pump stations. News24
  • Major SA conglomerates continues to find solutions to the ESKOM problem.
    • After Anglo American announced plans to enter the renewables market,
    • Richards Bay Minerals also announced a 300GWh solar power partnership.
    • It will team up with international player Voltalia to build a power plant in Limpopo. Moneyweb
  • Stage 4 load shedding to continue.



  • US Stocks remained under pressure.
    • The Dow closed down 340 points and the S&P 500 and the Nasdaq declined roughly 0.9% and 0.7%, respectively.
    • Investors digested a slew of economic releases and the outlook for monetary policy.
    • On Friday , losses continued with Futures contracts all lower in Asian trading.
      • US stock futures again slipped on Friday after the major averages declined for the second straight session.
  • Several Fed policymakers reaffirmed the central bank’s commitment to tame inflation by raising rates to a restrictive level.
    • Now all eyes are on the US September jobs report for further clues on the Federal Reserve’s rate-hike path.
    • Cleveland Fed Bank President Loretta Mester said the Fed has to be “singularly focused on inflation” .


  • The US 10Y Treasury yield, which is a benchmark for borrowing costs worldwide, consolidated around 3.8%.
    • It was  not far from a 14-year peak of 4% touched in late September, as investors reassessed the outlook of tightening monetary policy.
  • Several FED speaker reaffirming the FED’s commitment to rein in inflation even as growth slows.
    • Despite some evidence that price pressures are easing and the job market is starting to cool,
      • several Fed policymakers have reaffirmed their support for keeping monetary policy tight for some time.
  • The next crucial catalyst this week will be the nonfarm payrolls report on Friday .
    • It will provide a more precise update on the labour market strength and wage pressures.


  • The Dow declined 346 to 29,926
  • The SP500 fell 38 to 3,744
  • The Nasdaq declined 75 to 11,073


Asian markets lower following a drop on Wallstreet .

  • In Japan, the Nikkei 225 dropped 1% to 27,030, breaking a 4-day advance, as US Fed officials signaled determination in bringing down inflation with more rate hikes.
    • Central bank action making traders fearful that it could lead to a global recession.
    • Investors also braced for the monthly US jobs report that could offer new clues on the likely path for US monetary tightening.
    • Technology stocks led the market lower but nearly all other sectors declined.
  • In Australia, the ASX 200 fell 0.5% to below 6,800 on Friday, ending a three-day rally and tracking losses on Wall Street.
    • The drumbeat of hawkish remarks from US Fed officials stoked fears about a potential recession.
    • Financial stocks led the decline, with the “Big Four” banks losing between 0.3% to 0.7%.
    • Heavyweight iron ore miners also fell, including BHP Group (-1%), Rio Tinto (-0.4%).
    • Still, the benchmark index is on track to finish the week higher, likely posting its second weekly gain in seven. Reuters
  • The US dollar held its recent advance to above 112 .
    • The Buck underpinned by a drumbeat of hawkish remarks from Fed officials.
      • Today traders and investors look ahead to the pivotal monthly jobs report that could guide the central bank’s monetary decision in November.
    • The nonfarm payrolls report due later in the global day is expected to show that the US economy added 250,000 jobs in September.
      • Any surprises to the upside would reinforce bets for further monetary tightening and drive another dollar rally.
    • Cleveland Fed Bank President Loretta Mester said the Fed has to be “singularly focused on inflation” .
      • Thus echoing remarks from other central bank officials who sounded unequivocally committed to bringing down inflation with more rate hikes.
      • This would be even at the cost of higher unemployment and weaker growth.
      • The dollar held its gains against the euro, the sterling, the yen. FX news
  • Brent crude oil traded near $94/bl, having rallied about 10% so far this week .
    • Traders citing OPEC+ production cuts as the chief drivers of price action.
    • OPEC+ agreed to cut output by 2 million barrels per day or about 2% of global supply.
    • It was the biggest output cut since the start of the pandemic.
    • Saudi Arabia said the group moved in response to rising interest rates in the West and a weakening global economy.
    • However, the Biden administration rebuked its decision and said it would explore options with the US Congress to reduce the cartel’s influence over energy prices.  Gulf Energy news
  • Gold traded above $1,720/oz after falling as much as 1.4% in the previous session.
    • The Yellow metal whipsawing, by shifting views on the likely path for US monetary policy.
    • Still, the metal is up nearly 4% this week as it benefited from recent weakness in the dollar and Treasury yields.
    • Meanwhile, investors remained cautious ahead of today’s NFP report.
    • Moreover, Federal Reserve officials pushing back against speculations for a Fed pivot next year. KItco metals


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