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Morning NOTE

 9 March 2023


The ZAR remained under pressure following day 2 of Fed chairman Jerome Powell’s testimony.


The Rand continues to trade on the back foot following, hawkish Fed comments.

  • The local unit consolidating above the 18.5000 level as investors reprice risk assets for a world where the Fed hikes 50 bps in March.
  • Recall, markets only priced in for 25 bps, and many analysts now calling the Fed out for  slowing down too soon with its last 25 bps hike.
    • The strong jobs market and inflationary pressures, particularly in the Services sector remaining a concern.
  • The Dollar rise relentless, and the ZAR not the only currency under pressure. Major currencies like the Euro, Pound and the Yen all under pressure.
  • The local unit also digesting news that S&P revised SA ‘s outlook to stable from positive.
    • Investors will now be looking to US NFP  due on Friday for confirmation that strong jobs growth supports bigger interest rate increases.
    • S&P Global said late on Wednesday that it had downgraded South Africa’s outlook to “stable” from “positive”, citing infrastructure constraints and severe power cuts.
    • The downgrade followed disappointing gross domestic product data released earlier this week,
      • which showed South Africa’s economy contracted more than expected in the last quarter of 2022 and could be on track for a recession if it shrinks again this quarter.

Data this week 

Thursday 9th

  • 11h00 : SA CURRENT ACCOUNT  -R17BN VS  -R18BN

Friday 10TH



Market Movement Today:

  • The ZAR range traded near its weakest levels of 18.6000 following the 2nd day of testimony from Jerome Powell.
    • The local unit continues to tread water on the back of a hawkish Fed
    • Markets adjusting their forecasts for fed action with 50 bps priced in for the March meeting vs 25 bps (pre- previous NFP report).
      • In the 2 day testimony Powell once again called for higher rates to combat inflation.
  • Friday’s NFP report a “fire cracker”, that will spark a continuation of the RISK OFF SENTIMENT(strong jobs number),
  • or a reversal (if a softer than expected report)
  • With an expectation of  +205k  vs 517k previous
  • Any upside surprise, likely to once again throw the cat amongst the pigeon and create a negative environment for RISK Assets.
  • The 10YT remains around the 4% level and the SP500 below the key 4,000 level.
  • This morning we once gain opening near  multi-year highs (during the covid pandemic).
  • The sentiment firmly RISK OFF, and we can likely see more weakness leading into tomorrow’s  NFP report.
  • Trade :  we advise short term importers to exact cover and exporters to utilise both FX options and FEC’s.


Expected Ranges:

  • USDZAR :  Expect a range 18.4300-18.7300
    • Importers 18.5300-18.41300
    • Exporters 18.6300-18.7300
  • EURZAR :  Expect a range of 19.4300-19.7600
    • Importers 19.5400-19.4300
    • Exporters 19.6500-19.7600
  • GBPZAR  :  Expect a range of 21.8400-22.1700
    • Importers 21.9500-21.8400
    • Exporters 22.0600-22.1700


  • USDZAR 18.5800
  • EURZAR 19.6000
  • GBPZAR 22.0300


  • Ratings agency S&P Global revised South Africa’s credit rating outlook to stable from positive on Wednesday,
    • S&P also affirming the long-term foreign and local currency debt ratings at BB- and BB, respectively.
    • The  agency added economic growth faced increasing pressure from infrastructure constraints, particularly severe electricity shortages.
    • S&P said reforms to address infrastructure shortfalls and to improve governance and performance at state-owned enterprises were slow and impeding economic growth.
    • But on a positive note, the agency acknowledged that the country’s fiscal position improved in 2022 as tax revenue rose.
  • The Minister of Electricity, Kgosientsho Ramokgopa, announced he has already begun his work to help Eskom resolve the crippling power cuts.
    • He has already planned meetings this week, with some of the country’s big energy users and with Eskom.
    • Ramokgopa joined several ministers and deputy ministers, who were sworn-in on Tuesday. EWN
  • The National Council of SPCAs (NSPCA) has confirmed that another big cat is on the loose in Gauteng.
    • The council stating the lion had been seen near the Hennops hiking trail along the R511 in Centurion.
    • The country has seen a variety of big cats escape in recent months.
    • A tiger was shot dead after escaping from its holding are in the south of Johannesburg,
      • while another lion was also shot dead after escaping from its container in the North West. News24


  • US stock futures were little changed on Thursday as investors continued to assess the outlook for US interest rates in light of recent comments from Federal Reserve Chair Jerome Powell .
    • `Futures contracts tied to the three major indexes were all trading near breakeven.
  • In regular trading on Wednesday, the Dow fell 0.18%, while the S&P 500 and Nasdaq Composite rose 0.14% and 0.4%, respectively.
    • Those moves came as Powell said the central bank would likely need to raise rates more than expected in response to hotter-than-expected employment and inflation data.
    • The market continues to wait for Friday’s NFP report, that will likely confirm (hawkish) or reverse current market trends .
  • The yield on the US 10-year  bottomed around 3.95%, remaining below the three-month high of 4.09% touched on March 2nd.
    • Investors assessed the pace of future rate hikes by the Federal Reserve.
    • Yesterday , the latest ADP figures report showed a still-tight US labour market, underpinning convictions that the Federal Reserve’s monetary policy tightening may be far from over.
  • On the policy side, Fed Chairman Powell stated that recent hot economic data might force the central bank to increase interest rates more aggressively and that the terminal rate may be higher than anticipated.
    • Despite the pullback in 10-year Treasury yields, the remarks drove investors to price an almost 80% chance of a 50bps interest rate hike instead of back-to-back 25bps increases.
    • As a result, the spread between the two and 10-year yields widened to as much as 104 basis points, the deepest inversion since 1981.


  • The Dow declined 58 to 32,798
  • The SP500 added 5.64 to 3,992
  • The Nasdaq  added 46 to 11,576

:  image: Trading economics


The Dollar

  • The dollar remained above 105.5 on Thursday, hovering near its strongest levels in over three months.
  • The Buck underpinned by hawkish remarks from Federal Reserve Chair Jerome Powell and hotter-than-expected US employment data.
    • Powell warned this week that the ultimate level of interest rates could be higher than anticipated in light of strong economic data,
      • and that the central bank would be prepared to increase the pace of rate hikes if needed.
  • Data released on Wednesday also showed that US private employment rose more than expected in February.
    • The data  pointing to ongoing tightness in the labour market.
    • Markets are currently expecting the Fed to raise interest rates by 50 basis points in March.

Asian markets higher in Thursday trading, following a subdued session on Wall Street.

  • In Japan, the Nikkei 225 Index rose 0.63% to close at 28,623, hitting its highest levels in at least six months.
    • Investors looking  ahead to the BOJ  policy decision on Friday, also the BOJ Governor Haruhiko Kuroda’s final meeting.
  • Investors also digested data showing Japan’s economy stagnated in the fourth quarter, supporting the case to maintain massive stimulus.
  • BUT Fed fears remain , as hawkish remarks from Jerome Powell and hot employment data raised concerns about further US interest rate hikes.  Reuters
  • In Australia, the ASX 200 Index moved up 0.05% to close at 7,311, recouping some losses from the previous session.
    • But market caution capped gains as hawkish remarks from Federal Reserve Chair Jerome Powell .
    • Also ,the RBA announced,  that the central bank is closer to reaching a point of pausing interest rate increases as monetary policy has become restrictive.

Technology stocks led the advance. Bloomberg

Crude oil

  • US WTI crude futures remained below $77/bl per barrel on Thursday after losing nearly 5% in the past two sessions.
    • Prices  weighed down by expectations that the US Federal Reserve will tighten policy further to combat inflation
      • Traders citing the actions of the FED will likely raise the risk of an economic slowdown that could dampen energy demand.
    • OPEC Secretary-General Haitham Al-Ghais also said weakening oil consumption in Europe and the US could threaten the market.
      • Meanwhile, official data showed that US crude inventories unexpectedly fell by 1.7 million barrels last week, the first decline this year.
      • Investors also continued to assess the demand outlook in China, as the world’s top crude importer dismantled strict Covid curbs but set a modest growth target for this year. Gulf Energy news


  • Gold held near $1,810/oz on Thursday, trading close to its lowest levels in over two months.
    • Prices remained under pressure following hawkish remarks from Federal Reserve Chair Jerome Powell and hotter-than-expected US employment data.
    • Markets are currently expecting the Fed to raise interest rates by 50 basis points in March, this an adjustment to earlier views of 25 bps.
    • Traders watching Fed policy as it will determine the future direction of Bullion prices. –  Kitco metals report

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