Morning Wrap

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%