The ZAR recovered as risk appetite returned to markets across the world.
- The Rand recovered from a low of 16.3200 to open at 16.1000, before reaching 16.0300 in opening trading.
- Traders citing a liquidation of “stale” Dollar longs ahead of tomorrows Inflation data and Thursday’s SARB MPC.
- The market widely expecting a 50 bps hike that will once again restore the ZAR’s carry attractiveness.
- The market also awaiting Fed Chair Jerome Powell speaking at 20h00.
- Attention will once again be paid to the language used and the possibility of a 75 bps hike.
- In addition, USD Bulls have taken some money off the table ahead of Powell’s speech.
- Today : Expect a stronger Rand on the back of improved risk sentiment, but importers are encouraged to BUY USD below R16/$.
- The longer term technical remain in favour of a Dollar Bull run as long as the FED hikes rates.
- Major risk event this week:
- Thursday: The SARB MPC decides on rate policy with + 50 bps expected to the Repo and Prime Overdraft rate.
- USDZAR : Expect a range 15.9100-16.2800
- Importers 15.9700-15.9100
- Exporters 16.1600-16.2800
- EURZAR : Expect a range of 16.6600-16.9200
- Importers 16.7000-16.6600
- Exporters 16.8300-16.9200
- GBPZAR : Expect a range of 19.6500-20.0100
- Importers 19.7200-19.6500
- Exporters 19.9200-20.0100
- USDZAR 16.0300
- EURZAR 16.7500
- GBPZAR 19.8000
- US stock futures edged higher on Tuesday following another volatile session on Wall Street.
- Investors remain concerned about rising interest rates, high inflation and the prospect of a global economic slowdown continued to weigh on sentiment.
- Futures contracts tied to the three major indexes were all trading in positive territory.
- In regular trading on Monday, the Dow eked out a 0.08% gain ,while both the SP500 and Nasdaq declined.
- US 10 Year Bond Yield was 2.92% traded higher.
- Markets continue to price in aggressive near-term hikes meant to curb surging inflation and may tilt the economy towards a recession.
- Latest data showed that the headline CPI in the US held close to a 40-year high at 8.3% in April, while the core CPI also came in above expectations at 6.2%.
- The data stoking worries that elevated prices may persist and fuelling concerns about faster interest rate hikes. Source : US treasury
- The Dow added 26 points to 32,223
- The SP500 fell 15 points to 4,008
- The Nasdaq fell 142 to 11,662
- image : Trading economics
- Asian markets higher on the back of a rally on Wallstreet.
- Stocks rebounding after what has been a torrid time for markets as Risk assets declined sharply across the board.
- In Japan, the Nikkei 225 recovered to trade at 26,643 in subdued trade on Tuesday, as investors navigated a challenging market environment.
- Traders citing key risks to be rising interest rates, high inflation and the prospect of a global economic slowdown.
- Investors welcomed news that Shanghai plans to gradually reopen after spending more than 6 weeks in lockdown.
- In Australia the ASX200 recovered to trade at 7,128, and rallying for a 3rd straight session.
- Aussie markets lifted by mining and energy stocks on higher commodity prices.
- Local energy stocks tracked oil prices higher amid tight global supplies and a looming EU ban on Russian oil. TE
- Crude oil rallied sharply to $114/bl after rising for four straight days to the highest close since March 23.
- Supply (Russia) concerns seem to outweigh demand (China) concerns, resulting in upward pressure on prices.
- On Monday, EU foreign ministers failed to pressure Hungary to lift its veto of a proposed oil embargo on Russia, with Lithuania saying the bloc was being “held hostage by one member state.”
- The US oil benchmark has also been rising at a faster pace than Brent in recent sessions, as US gasoline prices surged to record highs on rising demand coupled with restrained refining capacity.
- US producers are ramping up production in order to replenish inventories that have dwindled in the wake of Russia’s war in Ukraine. Energy News
- Gold recovered to open at $1830/oz after the Dollar declined and traders booked profits ahead of Jay Powell’s speech tonight.
- However, rising US yields slowing down the Yellow metals rise.
- The benchmark US 10-year yield bounced back above 2.9% on Tuesday, limiting demand for the non-interest-bearing metal.
- The WAR in Ukraine also sending more investors to the safe-haven metal, as what is being deemed “good buying levels” . Kitco metals
- The US dollar declined to the 104 level on Tuesday, and in turn retreating from a 20-year high reached last week.
- Traders took profits and scaled back bets on whether US interest rate hikes will drive further greenback gains.
- The dollar also tracked a recent decline in US Treasury yields as investors sought the safety of bonds amid concerns that aggressive near-term hikes.
- Markets are priced for at least a half percentage point rate increase at each of the next two Fed meetings in June and July.
- Traders also keeping an eye on Powell’s speech tonight. FX news
- Bitcoin US Dollar traded at 30,300.5 this Tuesday May 17th, increasing 1.33% since the previous trading session.
- The crypto currency stabilising after the recent loss in value following the FED’s announcement to drain liquidity from the market to fight inflation.
COVID-19 SOURCE https://www.worldometers.info/coronavirus/
Cases / Deaths / Recoveries
- Turkey opposed both Sweden and Finland’s application to join NATO.
- The alliance needs a unanimous 30 member vote to obtain approval.
- Both Nordic countries announced it would send envoys to Turkey to discuss.
- Moscow has warned of “retaliatory steps” if the countries join the alliance, with Russian President Vladimir Putin describing the development as “a problem.” CNBC
- Ukrainian forces have completed their “combat mission” in Mariupol, according to a statement by the country’s military.
- It comes after hundreds of people were evacuated from a steel plant that was the last holdout in the city under relentless Russian bombardment.
- Russian forces have claimed victory.
- WORLD 519,865,036 / 6,284,713 / 474,595,557
- USA 84,066,379 / 1,026,109 / 81,163
- SA 3,871,085 / 100,360 / 3,696,731