Morning Wrap

• The Rand recovered in overnight trading to trade around the R19/$ handle ahead of the weekend.
  • The local bank traders citing some profit-taking ahead of the weekend with Dollar yields also drifting lower.
• Overall, the US Dollar remains on the front foot.
  • The dollar index eased to around 103.2 on Friday but was still on track to advance for the fifth straight week.
    • FOMC minutes showed that policymakers stressed that upside risks to inflation remain, leaving the door open to further policy tightening.
    • However, some participants flagged the economic risks of pushing rates too far, emphasizing that future rate decisions would depend on incoming data.
    • The dollar is set to gain against most major currencies this week but remains down against the sterling as key measures of price growth monitored by the Bank of England failed to ease in July.
  • Risk assets are lower across the board, with the SP500, Gold, Nasdaq all lower.
     
• Earlier SARB comments alluded to more pain for South Africans with higher rates on the cards if inflation remains elevated.
  • This is a warning after the AA mentioned more fuel price hikes are on the cards.
     
• In addition, markets are also starting to pay attention to the BRICS meeting hosted by South Africa next week.
  • Expect some volatility, but overall the driver remains the US yield curve.
     
• Trade:  BUY USDZAR on dips

Markets this morning:

• USDZAR 19.0300
• DOLLAR 103.37
• EURUSD 1.0875
• SP500 4,375
• GOLD  1892
• US10YT 4.21%