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Morning Wrap

4 August 2023

Good Morning

The ZAR continued its decline after the Dollar rebound continued due to higher US yields.

Market Movement Today:

The ZAR reached its weakest level of  R18.7700/$ after the Dollar surge continued.

The Dollar rally continued after US yields reached 4.18% on the back of Fed monetary policy concerns and Treasury issuances.

  • The benchmark US10YT yield is higher on the back of:
  1. Stronger economic data supporting a Fed hike.
  2. Fitch downgrade of Us debt forcing yields higher.
  3. Treasury issuances of $103bn next week.
  4. The risk of Non-farm payrolls this afternoon.  
  • We expect the ZAR weakness to continue, but advise caution ahead of today’s NFP report.
    • Traders likely to book some profits and a ZAR pullback (stronger) should not be unexpected.
    • Technically a break of 18.5600 targets, opens up 18.4000 and a retest of 18.7800 opens up 19.1500.
       
  • Trade :  BUY USDZAR on DIPS

Data This week

Friday

  • 14H30  US NON FARM PAYROLLS  200K EXPECTED VS 209K PREVIOUS
  • 14H30  US UNEMPLOYMENT RATE 3.6%  EXPECTED UNCHANGED

Markets this morning:

  • USDZAR 18.6500
  • DOLLAR 102.47
  • EURUSD 1.0947
  • SP500 4,523
  • GOLD  1932
  • US10YT 4.18%

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