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Morning NOTE

9 November 2022


The ZAR traded to the bottom end of Monday range, briefly reaching 17.6600 on the back of positive risk sentiment and a weakening Dollar.


The Rand traded remained inside Monday’s range on the back of rising equity markets as market remained in RISK-ON mode ahead of tomorrow’s US CPI data.

  • Traders betting inflation will print lower and that the FED will slow down its monetary tightening, as it looks to combat inflation.
  • US markets higher, after the SP500 traded firmly above 3800 and the US 10YT yield retreated to 4.14% after trading above 4.22% at one stage.
  • The Rand also benefiting from a weaker Dollar as investors await the US mid term elections for the US house of Representatives.
    • At the time of writing GOP looks to be ahead in the race for the House and the Democrats are in the lead in the Senate.
    • This effectively means a “hung” Congress , and the Biden administration , like so many before him ”will be unable to pass legislation except through executive orders”.  
    • The Dollar trading lower on the back of this uncertainty, but the  key remains TOMORROW’S US CPI DATA and the path of future rate hikes. 
  • Traders continue to focus on Thursday’s US CPI and the outlook for US interest rates,
  • Markets awaiting the results of the  US mid -term elections today.
  • It appears the vote will be split with major parties controlling one of the chambers

Significant Market Data:


  • 11h30: SA mining, Gold and Manufacturing data
    • Mining expected at -4.3% YOY vs -5.9% previous
    • Gold expected at -15.7% YOY vs -17.4% previous
  • NB:  contraction continues in SA’s industrial sector, as the industry suffers at the hands of ESKOM and loadshedding and Labour demands.


  • The ZAR consolidating near 4 week strongest levels, on the back of a weaker Dollar.
    • The Buck remains under pressure as markets await the US election results as well as tomorrow’s US CPI .
    • Treasury yields lower and stock markets higher all adding to RISK ON SENTIMENT.
    • The environment allowing for ZAR gains, even as ESKOM  once again restarted loadshedding.
  • Markets ignoring SA domestic energy supply concerns and remains firmly focussed on US interest rate policy .
  • We expected similar trading conditions today, as we had yesterday as markets continue to wait for CPI DATA tomorrow.
  • NB: We once again opening inside the range and expect another session inside 17.5800-17.8800.
    • A break of 88 targeting 94 before 18.0500
  • Trade:  Range trading : 17.5800-17.8800

Expected Ranges

  • USDZAR :  Expect a range 17.5800-17.8800
    • Importers 17.6800-17.5800
    • Exporters 17.7800-17.8800
  • EURZAR :  Expect a range of 17.6600-17.9400
    • Importers 17.8200-17.6600
    • Exporters 17.8800-17.9400
  • GBPZAR :  Expect a range of 20.2800-20.6400
    • Importers 20.4000-20.2800
    • Exporters 20.5200-20.6400


  • USDZAR 17.7500
  • EURZAR 17.8600
  • GBPZAR 20.4700



    • On Monday, the US Treasury announced sanctions targeting companies owned by alleged ISIS members.
      • some of whom are being sanctioned for the second time.
    • The Financial Intelligence Centre (FIC) said law enforcement agencies are conducting an intensive investigation into alleged members of the terror group ISIS .
      • It has become apparent that they have been operating in this country.
    • The centre said it was acting on information received from the US.
    • FIC said it – along with law enforcement agencies – has been studying the activities of the individuals concerned. EWN


  • Finance Minister Enoch Godongwana stated emphatically on Tuesday that government is not deviating from its transformational and reconstruction and development frameworks.
  • Government has no intention of scrapping black economic empowerment (BEE) or localisation criteria in its public procurement policy, and has dismissed recent media reports indicating otherwise.
  • All that has happened is the publication of the new Preferential Procurement Regulations of 2022. MONEYWEB

Transnet / corruption

  • A former Transnet executive will appear in the Specialised Commercial Crimes Court in Palm Ridge on Wednesday.
  • The charge relating to corruption and money laundering. 
    • The ex-boss will appear alongside managers of a company that carried out rail maintenance at Transnet. 
    • A NPA spokesperson said the charges emanated from an unlawful payment of R25 million made in December 2011.
    • The money was allegedly used towards purchasing a R3.7 million house in Bassonia in Johannesburg.  News 24


  • US stock futures held steady on Wednesday as investors looked ahead to the results of the US midterm elections.
    • Traders betting on Republicans to take back the House and create a gridlock in Washington.
  • In regular trading on Tuesday, the Dow jumped 1.02%, the S&P 500 climbed 0.56% and the Nasdaq Composite added 0.49%, with US stocks extending gains for the third session.
    • Markets are anticipating a split government, with the GOP likely to win the House and possibly the Senate, thus placing a check on the Democratic policy agenda.
    • Investors also await the October inflation report due on Thursday for hints on how much further the Federal Reserve may tighten financial conditions as it seeks to cool an overheating economy.
    • Meanwhile, Disney shares dropped more than 6% in extended trading after missing quarterly earnings and revenue estimates after the release of its .


  • The US 10-year Treasury yield, the benchmark for borrowing costs worldwide, consolidated around 4.1%, not far from a 15-year peak of 4.3% reached in late October.
    • Worries remain about inflation and aggressive Fed tightening spooking investors.
    • Recent data showed that the job market remains extremely tight, now, all eyes turn to October inflation data, due on Thursday, for more clues on future interest rate hikes.
    • Meantime, Germany’s 10-year Bund yield, the European benchmark, rose to as high as 2.3%, closing in on its highest level since August 2011. 
  • In Europe,
    • Germany’s benchmark 10-year Bund yield extended gains above 2.3%, moving closer to 11-year highs hit at 2.5% on October 21st.
      • This on the back of expectations that the ECB  will keep raising rates aggressively to tame stubbornly high inflation despite the ongoing recession risks.
      • ECB official, de Galhau said recently that the central bank must not stop raising interest rates until underlying inflation has peaked,
        • but it may slow the pace of hikes once rates hit a level that starts to restrict growth.
      • In the last two weeks, the ECB, the US Federal Reserve and the Bank of England have delivered 75 bps rate hikes and signalled more increases are to come.


  • The Dow added 333 to 33,160
  • The SP500 gained 21 to 3,828
  • The Nasdaq  added 51 to 10,564


  • Asian markets trading mixed with stocks awaiting the results of the US mid term elections and policy changes towards China as well as tomorrows US CPI data.
    • In Japan, the Nikkei 225 fell 0.56% to close at 27,716, retreating from 8-week closing highs, as select index heavyweights slumped on disappointing quarterly results.
      • Investors also cautiously awaited the results of the US midterm elections, with markets betting on Republicans to take back the House and create a gridlock in Washington.
      • Nintendo led the declines, losing 7.1% as the games maker slashed its annual forecast for Switch console sales by 9.5% to 19 million.
    • In Australia, ASX 200 Index up 0.58% to 6,999 on Wednesday, closing at its highest level in eight weeks. Leading the rally were mining stocks leading the charge on stronger metals prices.
      • Heavyweight miners gained on firmer iron ore and copper prices amid hopes that China would gradually ease Covid curbs, including BHP Group (2.1%). Reuters
  • The US dollar index held below 110 on Wednesday after losing about 3% in the past three sessions.
    • The Buck remained under pressure as traders awaited results of the US midterm elections
    • Latest polls showed that the GOP are likely to take back the House, placing a check on the Democratic policy agenda.
      • Resulting a government with effectively no power to exact any policy changes.
      • Investors are also looking ahead to a key US CPI report on Thursday, hoping it will confirm the downward trend in inflation.
    • Markets are currently priced for a more moderate half percentage point Fed rate hike next month,
      • but a hotter-than-anticipated inflation report could fuel bets for another supersized 75 basis point increase. FX news
  • Crude oil Brent held a recent decline to below $96/bl. Prices lower by nearly 3% in the previous session.
    • China and demand concerns a major stumble block.
      • this as Covid-related uncertainties in the world’s top oil importer and a larger-than-expected build in US crude inventories dampened the demand outlook.
    • China’s escalating virus resurgence stoked fears of potential new lockdowns, dashing hopes for a gradual economic reopening and rebound in energy demand.
    • Meanwhile, industry data showed that US crude stockpiles jumped by about 5.6 million barrels last week, beating expectations for a 1.1 million barrel rise.
      • Citing a drop off in demand.
    • Still, the supply outlook remains tight as OPEC+ while the European Union ban on Russian oil is set to take effect in December. Gulf energy news
  • Gold prices traded above $1,700/oz after surging more than 2% to reach a one-month high in the previous session.
    • Bullion lifted by a sharp retreat in the dollar and on technical buying.
    • Investors are also looking ahead to a key US CPI report on Thursday, hoping it will confirm the downward trend in inflation.
      • Markets are currently priced for a more moderate half percentage point Fed rate hike next month,
        • but a hotter-than-anticipated inflation report could fuel bets for another supersized 75 basis point increase.  Kitco metals


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