The ZAR remained in its range after reaching 15.8800 in Joburg trading, only to return back to 16.0000 in Asian trading.
- The Rand continues to range trade ahead of today’s testimony by Fed chair Jerome Powell.
- The local unit returning to the “mean” R16/$ level after reaching the bottom end of the USDZAR range of 15.8600 before rebounding.
- Stocks also lower in Asia, after a strong showing in New York.
- Yesterday Equities rallied in New York after TESLA gained 11% following comments by Elon Musk that he would reduce his workforce by 3.5%.
- The SP500 rallied on the news, (TESLA has the largest market cap in the index) before falling short of 3800.
- Stocks the drifted lower as global inflationary worries resurfaced as well as concerns about the health of the global economy following disturbing news out of Germany.
- Germany announced the country reached 58% of gas inventories and is about to implement emergency gas rationing also hit markets.
- The continued efforts to cut off all Russian Gas and Energy supplies continues to rock global markets, and provides a Bid for oil prices.
- The US Dollar being the primary benefactor as investors once again looked to buy the US Dollar, as shown by the drop in 10YT yields to 3.23%.
On the data front:
- 10h00: SA INFLATION 6% expected vs 5.9% previous YOY
- 10h00: SA Core INFLATION 4% vs 3.9% previous YOY
- 14h30 : Fed CHAIR Jerome Powell starts his 2 day testimony to the US congress on the state of the US economy.
- NB: will once again likely to lead to increased volatility in financial markets.
- Today :
- Expect range trading to continue around 16 the figure.
- However, after testing the low side (15.8800), there remains a possibility that the ZAR could test the weaker side of the range at 16.1000.
- The pivot however remains R16.00/$
- Liquidity conditions have improved and any comments by Powell could see “real money” provide momentum in favour of this bias.
- After yesterday’s Risk rally, be open to a move where stocks open under pressure and we have the possibility of a weaker ZAR this session.
KEY RISK SA INFLATION – Higher than expected could see ZAR Gains, as the SARB will most certainly be hawkish in its monetary policy given we are at the top of 3-6% band.
Lower than expected, could see ZAR weakness as it might prompt the SARB to slowdown , thus affecting the “CARRY ADVANTAGE” of the ZAR.
- USDZAR : Expect a range 15.8000-16.0800
- Importers 15.8800-15.8000
- Exporters 15.9900-16.0800
- EURZAR : Expect a range of 16.6500-16.9200
- Importers 16.7000-16.6500
- Exporters 16.8200-16.9200
- GBPZAR : Expect a range of 19.4000-19.6900
- Importers 19.4800-19.4000
- Exporters 19.6300-19.6900
- USDZAR 15.9700
- EURZAR 16.7800
- GBPZAR 19.5500
- Eskom load shedding is back !
- Eskom will implement Stage 2 load shedding between 10:00 and midnight on Wednesday, and between 05:00 and midnight from Thursday to Sunday.
- The SOE and power utility said a breakdown of 4 generation units was to blame for the forced implementation which contributed to the capacity constraints.
- Also, Eskom CEO, De Ruyter said there is an opportunity to roll out renewables in Mpumalanga, which has good solar and wind resources and can ensure easy access to the grid.
- Expanding the transmission network will be costly, which is why it is essential to enable access to the existing infrastructure by repurposing old power stations, says De Ruyter. NEWS 24
- ANC president Cyril Ramaphosa survived another week in his party, without it interrogating the burglary at his Phala Phala farm in Bela Bela .
- ANC officials (CR allies) continue to fight against any investigations).
- However, one official did say “We don’t want to commit the same mistake we did with Nkandla and the swimming pool, we are not just going to report it willy-nilly”.
- Ramaphosa is facing possibly one of the toughest scandals since assuming power.
- This as calls in some quarters for the president to step aside from his role in both government and in the party. EWN
- Striking mine workers also refuse to work until their wage demands have been met.
- The strikers in Rustenburg, affiliated with Numsa met in Freedom Park near Rustenburg on Tuesday where they called for increased wages and additional benefits such as medical . EWN
- Global stock futures all lower in Asian trade on Wednesday after the major averages rallied overnight.
- In regular trading on Tuesday, the Dow gained 2.15%, the S&P 500 jumped 2.45% and the Nasdaq Composite rallied 2.51%.
- All sectors participated in the market rebound, led by the energy, consumer discretionary and consumer staples sectors.
- Notable gainers include Exxon Mobil (6.2%), Tesla (9.4%) and Walmart (3.3%).
- However, investors bracing for further volatility in equities, as Fed Chair Jerome Powell is set to testify before Congress on Wednesday and Thursday.
- The 10-year US Treasury note yield tumbled below the 3.3% level as investors rushed into safe-haven assets.
- Investors remain concerned that aggressive tightening from central banks could tip economies into a recession.
- News of Germany’s energy situation also a cause for concern as safe haven buying sparked a rush into the Greenback.
- The Fed raised its target interest rate by 75 bps on Wednesday to address the highest inflation seen since late 1981.
- They also appear unconcerned when projecting a slowing economy and rising unemployment in the months to come.
- On top of that, the RBA , BoE , BOC , SARB and the biggest surprise the SNB all raised rates.
- Investors remain on edge as the actions sparking worries that other central banks could consider raising rates higher and faster.
- RISK : Powell’s testimony today.
- The Dow rallied 641 to 30,530
- The SP500 gained 89 to 3,764
- The Nasdaq gained 270 to 11,069
image : Trading economics
COVID-19 SOURCE https://www.worldometers.info/coronavirus/
Cases / Deaths / Recoveries
- WORLD 545,863,833 / 6,343,809 / 521,837,532
- USA 88,244,870 / 1,038,900 / 3,165,493
- SA 3,987,979 / 101,640 / 3,872,768