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Morning Wrap

17 August 2023

Good Morning

The ZAR declined after Fed minutes showed  members see “significant upside risks to inflation” and remain open to more rate hikes.

Market Movement Today:

  • The Rand retreated after the FED minutes showed the propensity for higher rates remain.
    • The Dollar rebounding on the back of FOMC minutes highlighting that…
      • “… committee members see upside risks to inflation and remain open to more rate hikes..”
    • US yields higher with the 10YT trading at 4.25% with fresh economic data supporting the hawkish narrative.
      • Earlier US Home sales data surprised to the upside indicating the economy, remains resilient in the face of FED rate hikes as it battles inflation.
        • The result a spike US30YR Home mortgage rates.
        • Rates increased by 7 bps to 7.16% in the week ending August 11, 2023, the highest since October 2022.
  • All of the above allows for a resumption in the Dollar trend with risk assets sharply lower.
    • The SP500 declined to 4409, Gold lower at $1894/oz, the ZAR approaching R19.20/$ and the DXY at 103.44
  • Technically, the uptrend in the Dollar remains intact and we envisage more ZAR weakness.
  • Trade:  BUY USDZAR on dips

Markets this morning:

  • USDZAR 19.1500
  • DOLLAR 103.44
  • EURUSD 1.0877
  • SP500 4,410
  • GOLD  1894
  • US10YT 4.30%

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