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GOOD MORNING
The ZAR retreated on the back of a rebound in the Dollar ahead of key data this week.
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Market Movement Today:
The ZAR reached a weakest level of R18.5800/$ after the Dollar recovered sharply across the board.
The Rand weakness continued after risk assets sold off aggressively following the US ratings downgrade.
- The benchmark US10YT yield also reaching 4.13% after stronger than expected US private payrolls.
- Private businesses in the US hired 324k workers in July 2023, surpassing market expectations of a 189k rise.
- The service-providing sector added 303 thousand jobs, led by leisure & hospitality (201 thousand),
- The data supportive of another FED hike and Dollar supportive
- We except the ZAR weakness to continue, but advise caution ahead of Friday’s NFP report.
- The BOE also expected to hike by 25bps today and further pressure risk assets.
- Technically , the retracement levels of 18.5000 (61.8% reached) , and we expect some consolidation before further ZAR weakness.
- Trade : BUY USDZAR on DIP
Data This week
Thursday
- 11H0 EU PPI YOY -3.1% VS -1.5% PREVIOUS
- 13H00 UK BANK OF ENGLAND RATE DECISION +25BPS FROM 5% TO 5.25%.
- 13H00 US BOE MPC MEETING MINUTES
- 14H30 US WEEKLY JOBLESS CLAIMS EXPECTED 227K VS 221K PREVIOUS
- 16H00 US SERVICES PMI 53 EXPECTED VS 53.9 PREVIOUS
Friday
- 14H30 US NON FARM PAYROLLS 200K EXPECTED VS 209K PREVIOUS
- 14H30 US UNEMPLOYMENT RATE 3.6% EXPECTED UNCHANGED
Markets this morning:
- USDZAR 18.5000
- DOLLAR 102.24
- EURUSD 1.0937
- SP500 4,517
- GOLD 1934
- US10YT 4.13%
As of today, the morning note will be split into two parts; The Morning Wrap and then later followed by the Midday Note, which will provide more detailed market information.
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