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Morning Wrap

10 August 2023

Good Morning

The ZAR drop continued, reaching R19.08/$ on the back of resilient dollar on Thursday.

Market Movement Today:

The ZAR traded lower breaching the R19/$ level in thin SA holiday trading.

  • The move attributed to “easy” stop losses above the figure, that allowed for interbank traders to “ clear stops” as well as resurgent Dollar.
  • The risk-off sentiment remains across markets, due to renewed concerns around the US banking sector.
    • Moody’s downgraded 10 regional banks and ratings agencies also warned about the health of commercial real-estate.
    • The result a flight to the Dollar.

This morning Dollar gains limited on the back of profit-taking due to this afternoon’s pending US CPI report.

  • US inflation expected at 3.3% YOY vs 3% previous.
  • Analysts citing a removal of the base effects as well an increase in energy and food prices.
  • A higher number will likely send the Dollar higher, removing any chances of a Fed pause/cut later in the year.
  • If any it would support further Fed hikes.
  • We except the ZAR to consolidate between R18.8500-R19.000, ahead of CPI, before aggressive position taking based on the Dollar.
  • Trade : BUY USDZAR on DIPS

Markets this morning:

  • USDZAR 18.9500
  • DOLLAR 102.39
  • EURUSD 1.0993
  • SP500 4,492
  • GOLD 1917
  • US10YT 4.01%

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