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Morning NOTE

21 June 2022


The ZAR continued to fluctuate around the 16.0000, after a low liquidity session on the back of the US holiday.


  • The Rand continued in the R16.1000 – R15.8500. Trading volumes remained on the low side due to the US holiday.
    • Traders however turning their attention to SA inflation data as well as Powell’s 2 day testimony to the US Congress.
    • Risk assets however, trading off its lows in Asian trading, leading me to believe it is highly unlikely we will see “aggressive weakening” in the local unit today.
  • Treasury yields also remain off its high’s and will likely moderate the Dollar advance.
    • Hard data indicate the global economy continues to slow down in the face of rising interest rates and inflation.
    • And investors are questioning the FED’s hard-line stance to get inflation to 2%.
On the data front, tomorrow and Thursday remains key.
  • Wednesday :

    • 10h00:  SA INFLATION 6% expected vs 5.9% previous YOY
    • 10h00: SA Core INFLATION 4% vs 3.9% previous YOY
    • Wed/Thursday 14h30 : Fed CHAIR Jerome Powell starts his 2 day testimony to the US congress on the state of the US economy.
    • Once again likely to lead to increased volatility in financial markets.
  • Today :
    • Expect range trading to continue around 16 the figure, low side 15.8800 with 16.1000 covering the top.
      • Liquidity conditions will definitely improve, thus allowing more sustainable price action on either side of a range-break.
      • Given the support experienced by stock markets expect some ZAR gains towards the lower end of the range.
    • And remember we have Powell later in the week,
    • The market will keep an eye on the language of Powell’s speech (Wednesday) and more hawkish comments likely to add to Risk asset sell-offs (ZAR Weakness).
    • Likewise if he tones down the rhetoric, we could see some ZAR gains.
  • USDZAR :  Expect a range 15.8900-16.1300
    • Importers 15.9800-15.8900
    • Exporters 16.0800-16.1300 
  • EURZAR :  Expect a range of 16.7400-16.9700
    • Importers 16.8300-16.7400
    • Exporters 16.9300-16.9700
  • GBPZAR :  Expect a range of 19.5100-19.7600
    • Importers 19.5700-19.5100
    • Exporters 19.6900-19.7600
  • USDZAR 16.0500
  • EURZAR 16.8800
  • GBPZAR 19.6600


  • The freight industry and government have signed an agreement to assist with the N3 blockades.
    • However, the RFA said they will ‘never agree’ with proposal to reintroduce operating licences.
    • The Road and Freight Inter-Ministerial Committee (IMC), in partnership with road and freight industry stakeholders signed an 11-point action plan.
    • The plan aims to to deal with industry challenges and the recruitment of foreign nationals that led to recent further blockades on the N3.
  • Toyota South Africa Motors (TSAM) is still uncertain when it will be reopening its production plant in Prospecton near Durban.
    • The announcement comes more than two months after it suspended production because of significant damage caused by the floods in KwaZulu-Natal.
    • TSAM manager of corporate public relations Mzo Witbooi said this week it is not clear at the moment when the plant will reopen. Moneyweb
  • The property space remains under pressure and Mall landlords are forced to cut rents by 14% as major retailers play hardball.
    • Foschini group reported a 14% reduction in rental when negotiating lease renewals.
    • The company now paying 17.4% less than its pre-covid 2019 rentals. IOL
  • Tensions appeared to have dropped in Soweto.
    • Roads leading into and out of Soweto are open to traffic on Tuesday morning despite a planned march to the office of the Joburg mayor.
    • Residents of Soweto woke up to disruptions on Monday, with protests over power cuts and poor service delivery.
    • There are also calls for the removal of informal settlements across the township. EWN



  • Stock futures rose in early morning trading Tuesday following a brutal week as investors assessed a more aggressive Federal Reserve and rising chances of a recession.
    • Futures on the Dow Jones Industrial Average jumped 394 points, or 1.32%.
    • S&P 500 futures climbed 1.58% and Nasdaq 100 futures also rose 1.71%.
    • U.S. stock markets were closed earlier Monday for Juneteenth.
  • The 10-year US yield tumbled below the 3.3% level as investors rushed into safe-haven assets on concerns that an aggressive tightening from central banks could tip economies into a recession.
  • The Federal Reserve is fighting the highest inflation, last seen since late 1981 while projecting a slowing economy and rising unemployment in the months to come.
  • Across the pond,
    • the BoE delivered a 5th straight rate increase, and the SNB surprising markets by raising its policy rate for the first time in 15 years.
  • The market now awaiting Powell’s Humphrey Hawkins testimony later in the week.
  • The Dow fell 38 points to 29,888
  • The SP500 added 8 points to 3,674
  • The Nasdaq added 152 to 10,798
Futures Trading:
  • image : Trading economics
  • Asian markets all higher on the back of bargain hunters after last week’s brutal sell-off.  Investors however cautiously returning as Powell remains on the speaking circuit this week.
    • In Japan, the Nikkei 225 jumped 1.84% to close at 26,246, and rebounding from a 3-month low, with all sectors participating in the rally.
      • Investors also scooped up beaten-down shares following an extended selloff spurred by fears that aggressive monetary tightening could pull the global economy into recession.
      • Technology stocks led the advance, with strong gains from SoftBank Group (2.9%), Tokyo Electron (2.6)
      • The Japanese government voiced concern on Monday about the Yen’s rapid depreciation, saying it is being closely monitored for appropriate response.
    • In Australia, the ASX 200 Index jumped 1.41% to close at 6,524 on Tuesday, as investors bought up beaten-down energy and mining stocks.
      • Shares remained under pressure, following pressure from fears that aggressive monetary tightening could tilt the global economy into recession.
      • Meanwhile, investors remained cautious after Reserve Bank Governor Philip Lowe reiterated that Australians should be prepared for further interest rate increases.
      • He also added that future policy moves will be shaped by incoming data. TE
  • The US dollar fell toward 104.3 on Tuesday, after yields declined, supporting the Dollar remains the Fed policy of aggressively tighten monetary settings supported the currency.
    • Investors now look ahead to Fed Chair Jerome Powell’s appearance before Congress on Wednesday and Thursday for clues on the likely path forward for US monetary policy. FX news
    • In the latest commentary, Fed Governor Christopher Waller said Saturday he would support another hike of a similar scale at the central bank’s July meeting should economic data come in as he expects.
    • The Fed raised its benchmark interest rate by 75 basis points last week, the largest increase since 1994.
  • Gold held around $1,840/oz on Tuesday, nursing some losses from last week and remaining under pressure from a strong dollar and elevated Treasury yields.
    • The metal declined nearly 2% last week amid a global wave of monetary tightening aimed at bringing inflation down, led by the Federal Reserve’s 75 basis point rate hike.
    • Another Fed Bank President of Cleveland, Loretta Mester said Sunday that the risk of a US recession is increasing, and that it will take several years to return to the central bank’s 2% inflation goal.
    • Investors now look ahead to Fed Chair Jerome Powell’s appearance before Congress on Wednesday and Thursday for clues on the likely path forward for US monetary policy. Kitco metals
  • Crude oil futures rebounded with Brent crude up more than 2% toward $116/bl.
    • In turn it recouped some losses from last week
      • Following a brief decline on the back of demand concerns, Supply worries resurfaced with the replacement of Russian oil a major problem and greater than the drop in demand.
    • Oil prices have been supported by supply tightness spurred by the war in Ukraine and OPEC’s failure to increase production, at a time demand has been recovering from the Covid slump.
      • Investors also remain cautious about further disruptions to Russian oil exports as European sanctions kick in.
      • Also Treasury Secretary Janet Yellen also said that the US is in talks with allies to further restrict Russia’s oil revenue by capping the price it would get for its crude.
COVID-19 SOURCE Cases / Deaths / Recoveries
  • WORLD 544,354,209 / 6,340,915 / 519,727,058
  • USA 88,004,073 / 1,038,323 / 83,869,516
  • SA 3,986,601 / 104,604 / 3,870,895
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