The ZAR continued to lose ground against a rampant US dollar after more hawkish comments from Fed governors.
Significant data this week;
- USDZAR : Expect a range 16.7400-17.0500
- Importers 16.8400-16.7400
- Exporters 16.9500-17.0500
- EURZAR : Expect a range of 16.9300-17.1400
- Importers 17.0000-16.9300
- Exporters 17.0700-17.1400
- GBPZAR : Expect a range of 20.0900-20.2700
- Importers 20.1400-20.0900
- Exporters 20.1800-20.2700
- USDZAR 16.9200
- EURZAR 17.0400
- GBPZAR 20.1400
**HIGH RISK EVENT
- The future of Finance Minister Enoch Godongwana hangs in the balance amid charges of sexual assault against him.
- Ahead of the SA MTBPS there remains a risk of him being replaced.
- In addition, Detectives have asked Godongwana for a statement after a case of sexual assault was opened against him.
- Godongwana said he spoke to detectives who asked him for his version of events.
- He also confirmed he met with the ANC’s integrity committee on Wednesday. News24
- Deputy President David Mabuza was back in Parliament on Thursday where he was again quizzed about the struggling power utility and the energy crisis.
- Pushing back against the privatisation of Eskom, Mabuza, said the government has al the tools to get ESKOM functioning again.
- Mabuza added that the country needed additional generation capacity and external energy could be brought in from outside of Eskom in the meantime. EWN
- Standard Bank Group (SBG), Africa’s largest bank by assets, on Friday reported record headline earnings of R15.3 billion for the six months to 30 June 2022.
- It was a surge of 33% on the comparative 2021 half-year.
- Headline earnings per ordinary share was up 30%, to 936.2 cents, compared to 721.4c for the prior period.
- The bank also rewarded shareholders, with an interim dividend of 515 cents per share, at a pay-out ratio of 55%. Moneyweb
- Equity markets surprisingly resilient in the face of ultra-hawkish Fed rhetoric.
- So far for the week, the major US indices i.e. the DOW and SP500, both trading in positive territory.
- However, the Nasdaq is lower as investors continue worry about the expectation that the Federal Reserve will tighten further.
- The fears of 75 bps making the rounds after Bullard’s comments.
- This morning stock futures all lower as we approach the start of the week’s final session.
- The US 10YT trading at 2.92% yield on the back of hawkish Fed statements as markets look to price in 75bps.
- This is a different picture at the start of the month of August where the yields of the benchmark bond was set at 2.55%.
- Global inflation also remaining sticky, and this risk likely to add fuel to the fire.
- German, UK and even Japan (for years a deflationary basket case), has also printed higher than expected CPI.
- In addition to the Fed meeting at the end of September, the ECB is also expected to hike 50bps.
- The Dow added 18 points to 33,999
- The SP500 added 9.7 points to 4,283
- The Nasdaq gained 27 points to 12,965
- image : Trading economics
- Asian markets lower this morning following rate hike fears in the USA.
- In Japan, the Nikkei 225 shed 0.04% to close at 28,930. Japanese traders on edge after a hot domestic inflation reading.
- The data challenging the BOJ’s firm commitment in keeping interest rates ultra-low.
- Japan’s headline inflation rose 2.6% YoY in July from 2.4% in June, accelerating at the fastest pace since April 2014.
- In China, the Shanghai index fell 0.2% to around 3,270, extending losses from the previous session.
- Traders citing China’s shaky economy reflected by weaker-than-expected domestic data and slow appetite for credit.
- Mega banks, Nomura and Goldman Sachs downgraded their forecasts for Chinese GDP on Thursday.
- This poses a challenge to the PBoC which is pressured to take more easing steps.
- The PBOC is now expected to cut rates on Monday after unexpectedly slashing two key rates earlier this week. Bloomberg
- Crude oil continues to be gripped by demand fears with both the US WTI contract and North Sea Brent crude price below $100/bl.
- Recessionary worries and the impact on demand causing a slide in prices.
- The US Fed remains steadfast on raising interest rates further to bring inflation substantially lower.
- On the supply side, Russia sees revenue from energy exports jumping 38% this year due in part to higher oil export volumes.
- In addition, talks of a revival of the Iranian nuclear deal, also allowing for more supply and likely to pressure prices further. Reuters.
- Gold just can’t catch a break and prices continues to slide to $1750/oz.
- Prices under pressure due to the US Fed’s commitment to keep raising interest rates to bring down inflation.
- The US central bank’s hawkish stance has pushed up the dollar to a one-month high against major rivals.
- The greenback rallying on the back of rising rates making gold more expensive for buyers than holding other currencies. Kitco metals
- The US dollar index broke above the 107 mark, a level not seen in a month, as investors reassessed the outlook for monetary policy.
- This following fresh hawkish remarks from several Fed policymakers.
- St Louis Fed President James Bullard echoed the Fed’s intention to tighter monetary policy, leaning towards favouring another 75 bps hike in September.
- San Francisco Federal Reserve President Mary Daly highlighted the need to push interest rates to the restrictive territory to bring inflation down to its 2% target.
- Market moves came after minutes from the last Federal Reserve meeting signalled that a dovish pivot is unlikely until such an aggressive tightening would drag on growth. Fx news
- The Euro traded below $1.0100, and just above the key $1 dollar parity level as investors balance the ECB policy tightening path against the region’s economic outlook.
- The ECB is seen raising rates by 50 bps in September, following a similar move in July to tame soaring inflation.
- However, the region’s outlook is of concern due to the energy crisis triggered by reduced supplies from Russia. Fx news