Morning Wrap

The ZAR retraced Wednesday’s losses to reach R18.6500 after US CPI missed to the downside.

• The Dollar losing ground after yields briefly dropped below 4%.
• The index falling below 102, after CPI indicated a slowdown in price pressures that could place a hold on the Fed’s hiking cycle.
  • The US dollar was steady on Friday, with the index hovering around 102.5,
    • The annual inflation rate in the US rose to 3.2% last month from 3% in June, below forecasts of 3.3%;
      • while core inflation edged down to 4.7% from 4.8%, also less than expectations of 4.8%.
    • Traders digested US headline inflation reading for July that showed a moderate increase.
       
• Risk assets rallied sharply, but reversed as fast after San Francisco Fed president, Mary Daly said the latest CPI numbers do not mean that the central bank can declare a win over inflation.
  • The pressure of issuances from the US treasury department also keeping rates elevated will support the Dollar for now.
  • The news stopping and reversing the rally as yields once again spike to 4.10% resulting in a Dollar rebound.
  • She added that the labour market is not yet balanced, and that rates will have to remain higher for longer.
     
• We expect the ZAR to consolidate between 19.0000 to 18.7000 after another volatile week.
   
• Trade:  Range Trade

Markets this morning:

• USDZAR 18.8300
• DOLLAR 102.39
• EURUSD 1.0993
• SP500 4,492
• GOLD  1917
• US10YT 4.09%