The ZAR consolidated around the R16.5000/$ level as traders wait for new information to drive direction, likely the KEY NFP on Friday .
Significant data this week.
- 13h00 : Bank of England Rate decision + 25 bps expected.
- 14h30 : US NON-FARM PAYROLLS +250K expected vs 372k previous
- 14h30 : US UNEMPLOYMENT RATE 3.6% expected vs 3.6% previous
- The local unit also continues to benefit from broad based Dollar weakness.
- However this morning, we opening in a negative risk environment following a drop in stocks in New York and Asia.
- Futures markets opening lower this morning, so expect a weaker ZAR for this session.
- Importers advised to cover between 16.4400-16.3200, with a stop loss through 16.5000
- As the week progresses Be aware of the NFP data risk on Friday.
- The market currently expecting a weaker report.
- This opens up a risk to the topside for Dollar-Rand as any positive news could see another Strong Dollar rally.
- USDZAR : Expect a range 16.3200-16.6900
- Importers 16.4400-16.3200
- Exporters 16.5900-16.6900
- EURZAR : Expect a range of 16.7900-17.1100
- Importers 16.9200-16.7900
- Exporters 17.0250-17.1100
- GBPZAR : Expect a range of 20.1100-20.3900
- Importers 20.1800-20.1100
- Exporters 20.2900-20.3900
- USDZAR 16.5300
- EURZAR 16.9700
- GBPZAR 20.2400
- In big thumbs up for renewable energy and Eskom’s continued failure to keep the lights on, the City of Cape announced a project to buy excess electricity from generating customers.
- In the past, small-scale embedded generation (SSEG) customers were compensated through credits on their municipal bills – now they will be paid cash.
- These customers will also be permitted to sell more electricity to the City.
- The idea is to create an incentives programme to generate more electricity. Moneyweb
- Finance Minister Enoch Godongwana, said Eskom’s debt needs to be dealt with as it poses a risk to the state.
- The minister said that Eskom had not asked for money yet but the utility’s debt was unsustainable
- He added, “If the debt remains unsustainable, it poses a sovereign risk. EWN
- Eskom has awarded contracts for battery energy storage to two successful bidders.
- It will help bridge the gap between supply and demand when the electricity grid is under pressure.
- The power utility said the contract is for the design, supply and installation as well as operating and maintenance for a five-year period.
- Battery storage capacity is required to supplement available energy, particularly for evening peak usage when electricity demand climbs.
- British Airways has cancelled its franchise agreement with Comair.
- The agreement had a cancellation trigger brought about by the provisional liquidation of Comair, provisional liquidator Cloete Murray confirmed on Monday.
- Comair operated domestic and regional British Airways flights in southern Africa as part of the franchise agreement.
- British Airways is now looking for a new partner in the SA market. News 24
- US stock futures drifted lower on Tuesday after Wall Street kicked off the new month on a downbeat note.
- Futures contracts tied to the three major indexes drifted flat to negative.
- In regular trading on Monday, the Dow declined 0.14%, the S&P 500 lost 0.28% and the Nasdaq Composite fell 0.18%.
- Markets now await the July nonfarm payrolls report on Friday and more earning reports on Tuesday from AMD, Caterpillar and Paypal, among others.
- Inflation remains a concern especially against a back drop of negative economic growth.
- In addition, geopolitical tensions between the US and China.
- US House Speaker Nancy Pelosi will allegedly visit Taiwan today and China has warned of “serious consequences” if the trip goes ahead.
- Meanwhile, concerns about the strength of the global economy linger and the earnings season continues.
- The US 10YT declined to 2.55%.
- It was a level not seen since April, as investors continued to pile into safe-haven assets.
- Traders citing persistent fears that an aggressive tightening from major central banks will eventually tip leading economies into a recession.
- The FED, the world’s most influential central bank, is expected to raise its key rate to a high of around 3.25% by year-end to tame runaway inflation.
- However, recent signals of slowing economic activity, including disappointing GDP figures last week, supported a view that the Fed could moderate the pace of the rate increases.
- The Dow declined 46 points to 32,798
- The SP500 fell 11 points to 4,118
- The Nasdaq fell 21 points to 12,368
- image : Trading economics
- Asian markets lower across the region ahead of US house speaker Nancy Pelosi’s visit to Taiwan, despite China’s objections.
- In Japan, the Nikkei 225 dropped 1.42% to 27,595 retreating from two-month closing highs.
- The exchange reporting all sectors traded in negative territory as a stronger Yen, mixed corporate earnings and the risk of a global recession dented sentiment.
- Investors were also kept on edge by fears of an escalation in Sino-US tensions as US House Speaker Nancy Pelosi is set to visit Taiwan despite objections from China.
- In China, the Shanghai Composite fell 3% to 3,162, hitting its lowest levels in about two months.
- High-growth technology and new energy stocks led the decline, with sharp losses from East. TE
- Investor sentiment has also been dampened by the risk of a global recession as weak manufacturing data in major economies highlighted the darkening global economic outlook.
- Traders citing as growing tensions between China and the US ahead of US House Speaker Nancy Pelosi’s expected visit to Taiwan sparked a broad sell-off in Asia.
- Crude oil WTI prices slipped further toward $93 per barrel on Tuesday after tumbling almost 5% in the previous session.
- Traders referring to weak manufacturing data in major economies highlighted the darkening global economic outlook.
- JPM Global Manufacturing PMI softened in July, weighed down by declining output and new orders in developed markets such as the US, the Euro area, Japan and the UK.
- In contrast emerging markets saw mixed results.
- Fears that a global slowdown will hurt demand have gripped commodity markets in the past two months.
- Currently, oil prices down more than 20% from the June high.
- On the supply side, markets await the outcome of an OPEC+ meeting on Wednesday where it is likely to stick to its policy of modest supply increases, keeping the global supply tight.
- For now Demand concerns outweighing tight supply. ENERGY NEWS
- Gold prices continued its recent strong performance on the back of a falling US Dollar, under pressure from declining yields.
- The yellow metal advancing to above $1770/oz.
- Bullion hovering at its highest levels in four weeks, as a falling Dollar and Treasury yields supported bullion demand.
- Recent weakness in US economic data gave rise to speculations that the Federal Reserve may raise interest rates less aggressively in the coming months,
- The move pressuring the Dollar and US yields while driving gold prices higher.
- This trend is expected to continue throughout August as more data out of the US continue to indicate an economic slowdown.
- Geo-political tensions also on the rise, ahead of US House Speaker Nancy Pelosi’s visit to Taiwan also drove safe-haven demand for gold. KITCO METALS
- The US dollar
- The dollar traded near 105, hovering at its lowest levels in four weeks.
- The increasing risk of US recession bolstered the case for a less aggressive monetary tightening from the Federal Reserve in the coming months.
- The latest US GDP and manufacturing activity data signalled a weakening economy, while the monthly jobs report due on Friday is expected to show that the improvement in the jobs market is moderating.
- Last week, the US central bank raised its policy rate by 75 basis points in a widely expected move.
- Powell stating future policy decisions would be based on incoming data. Bloomberg
- The YEN
- The Japanese yen appreciated past 131 against the Dollar, hitting its highest levels in two months.
- Yen traders citing soft US economic data and a weakening growth outlook, all but supported expectations that the Federal Reserve will need to slow down the pace of future interest rate hikes.
- Declining factory activity in other major economies and rising tensions between the US and China ahead of US House Speaker Nancy Pelosi’s visit to Taiwan also drove safe-haven demand for the yen.
- Moreover, several Bank of Japan officials said recently that the central bank needed an exit strategy from its massive stimulus.
- The move likely to support the currency from the land of the rising sun. Reuters