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Morning NOTE

25 April 2022


The ZAR followed the Risk off trade and weakened to 15.7500


  • The Rand weakened to 15.7500 after asset markets across the world sold off sharply.
  • Investors exiting long positions as concerns about an aggressive US tightening cycle grabs their attention.
    • The Fed, last week showed its intention to hike by 50 bps, to curb 40 year high inflation.
    • Throw in the escalation of the WAR, after Putin tested a nuclear weapon and China continuing its lockdowns.
    • It all proved too much for traders to stomach.
  • We now have a US 10year approaching 3.00%, albeit lower this morning on safe-have rotation i.e. Traders sell stocks and buy bonds.
  • The big data movers this week are;
    • SA PPI on Thursday at 11h00 ( expected +10.8%) and
    • US GDP with 1.1% expected QoQ for Q1 , vs 6.1% previous.
    • A retest of 15.7500, opens up score to test 15.9300
      • The theme remains a stronger US Dollar (higher rates) and SA domestic factors i.e. Eskom / Flooding.
  • USDZAR :  Expect a range of 15.3600-15.9300
    • Importers 15.5500-15.3600
    • Exporters 15.7000-15.9300
  • EURZAR :  Expect a range of 16.6300-17.1500
    • Importers 16.7800-16.6300
    • Exporters 16.9300-17.1500 
  • GBPZAR :  Expect a range of 19.8300-20.2500
    • Importers 19.9300-19.8300
    • Exporters 20.1200-20.2500
  • USDZAR 15.6500
  • EURZAR 16.8200
  • GBPZAR 19.9900


  • KZN authorities are still tallying up the total cost of the damage caused by devastating flooding.
    • Various government ministers have been touring affected areas since flood waters receded.
    • The cost of the damage caused to water and sanitation infrastructure alone has been put at more than R1 billion.
    • Rail infrastructure has been damaged or destroyed to the tune of over R950 million. EWN
  • In addition, Sasol has declared force majeure on the export of certain chemical products.
    • The group, a producer of synthetic fuels and chemicals, said its quarterly volume outlook may also be impacted. IOL
  • In a blow for commercial game farmers, there appears to be an increased move by municipalities to change their property rates policies.
    • The move would allow them to bill game farms on a commercial rather than agricultural scale.
    • In Mangaung, the latest to propose such a change, it means owners of game farms will pay 15 times more from July 1, should the proposal be adopted. Moneyweb


  • US stock futures fell on Monday after Wall Street capped another losing week.
    • Traders worrying about  faster Fed tightening.
      • The major bourses traded lower last week, with the Dow( -1.9%), and the S&P 500 and Nasdaq Composite falling 2.8% and 3.8%, respectively, posting their third straight weekly decline.
      • Investors also watching Twitter, which reportedly is re-examining Elon Musk’s takeover bid after the billionaire investor disclosed he secured $46.5 billion in financing.
      • In addition, another busy week for  earnings week.
        • Big tech reports, which includes Amazon, Apple, Alphabet, Meta Platforms and Microsoft.
NB:  Traders await fresh PCE inflation data due Friday to guide the outlook for monetary policy. Bonds:
  • The US 10 Year Bond traded at 2.84%. US Treasury yields hovered near multi-year highs.
    • Investors were preparing for a series of rate hikes in the US, amid soaring inflation.
      • Fed Chair Jerome Powell said last week that the central bank committed to taming inflation, opening the door for a 50 bps interest rate hike in May.
    • Traders also concerns on expectations of more aggressive interest rate increases by major central banks.
  • The Dow fell 981 points to 33,811 (-2.82%)
  • The SP500 fell 121 points to 4,271  (-2.77%)
  • The Nasdaq declined 335 points to 12,839 (-2.55%)
  • image source: Trading Economics
  • Asian markets all lower following the route on Wallstreet on Friday. The decline in New York setting off a wave of selling.
    • In Japan, the Nikkei 225 fell 1.9% to close at 26,591 retreating further from recent highs, as Japanese shares tracked a sharp selloff on Wall Street.
      • Traders worried over rapid US rate hikes and slowing global growth.
      • Investors also watched the yen’s continued weakness. All sectors in Japan traded in negative territory, with sharp losses from index heavyweights including SoftBank Group (-7.8).
      • In addition, Nissan Motor shares dropped 5.1% following a Bloomberg report that Renault may sell part of its stake in the Japanese company in order to focus more on electric vehicles.
    • In China, the Shenzhen market declined 5% on the back of Wallstreet.  TE
  • Crude oil, fell 3%  to end at $98/bl., the price hitting its lowest in nearly 2 weeks.
    • Demand concerns remain on a prolonged Covid lockdown in China and rapid rate hikes in the US.
    • Monday’s slump extended a nearly 5% drop in the US oil benchmark last week as demand concerns remain at the front and centre.
    • Bloomberg reported, which is equivalent to a drop in crude oil consumption of about 1.2 million barrels a day.
    • Meanwhile, investors remained cautious as the worsening crisis in Ukraine could pressure the EU to sanction Russian oil and spur another rally. Energy news
    • Traders citing the prospect of faster Federal Reserve policy tightening continued to support the dollar and US Treasury yields, while decreasing demand for bullion.
      • Fed officials were committed to “front-end loading” inflation-fighting efforts, as Powell mentioned 50 bps hikes on the cards.
    • Gold declining as the dollar hit fresh 2-year highs following the remarks, while benchmark 10-year US yields held near 3-year highs. Kitco metals
  • The US dollar recovered its losses and strongly traded above 101, as prospects of higher rates boosted demand for the Greenback.
    • Last week Fed chair Powell, confirmed the Fed will work to step up its inflation fight, as it looks to hike rates at 50bps per session.
    • The buck supported by the prospect of faster Federal Reserve policy tightening and as investors sought safety due to economic and geopolitical uncertainties.  Fx news
  • U.S. Secretary of State Antony Blinken and Defence Secretary Lloyd Austin visited Ukraine on Sunday to discuss military aid with Ukraine’s President Volodymyr Zelenskyy.
    • The meeting held in in Kyiv — was deemed top secret and details only released after the Americans had left the country.
    • The U.S. pledged just over $700 million in military financing to help Ukraine and other allied countries in central and eastern Europe involved in the war effort. Bloomberg
  • Reuters reported that there are now 370,000 Ukrainian refugees in Germany.
    • Germany’s federal police has recorded 376,124 refugees from Ukraine to date, according to the country’s Interior Ministry.
    • These are predominantly children, women and elderly people.
COVID-19 SOURCE Cases / Deaths / Recoveries
  • WORLD 509,596,776 / 6,243,270 / 462,470,409
  • USA 82,662,748 / 1,018,335 / 80,465,351
  • SA 3,762,911 / 100,303 / 3,633,297
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