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Morning NOTE

26 April 2022


The ZAR consolidated inside the weaker range of 15.8000-15.6000, ignoring the rebound in Risk.


  • The Rand struggled to make any gains on the back of stronger risk sentiment.

    • Traders however focussing local factors, that include flooding and Eskom electricity supply.
    • The local unit hitting 15.7900, in overnight trading.
  • Traders citing the risk of a return of severe power cuts, devastating floods in KZN and the E. Cape raised concerns over the country’s economic outlook.

    • With this in mind the aggressive rate hikes by the Federal Reserve and a deterioration in projections for global growth remains a headwind.
  • The SA 10Y government bond yield also hitting 9.92%, after trading at 9.50% less than two weeks ago.

    • Traders adopting a global theme of selling fixed income securities as rates are expected to rise due to multi-decade inflation levels.
    • Foreigners remaining NET sellers of SA bonds.
  • Big data remains,

    • SA PPI on Thursday at 11h00 (expected +10.8%) and
    • US GDP on Thursday at 14h30 with 1.1% expected QoQ for Q1, vs 6.1% previous.
  • Today: The ZAR opening at the top end of the range with momentum on the weakside.

    • 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 15.9300-15.5500
    • Importers 15.5500-15.3600
    • Exporters 15.7000-15.9300
  • EURZAR :  Expect a range of 16.6300-17.1500

    • Importers 16.7500-16.6300
    • Exporters 16.9300-17.1500
  • GBPZAR :  Expect a range of 20.0200-20.2500

    • Importers 20.0200-19.8800
    • Exporters 20.1200-20.2500


  • USDZAR 15.7000
  • EURZAR 16.8500
  • GBPZAR 20.0200


  • The KwaZulu-Natal government said it had made an “honest mistake” when it estimated that the cost of repairing flood damage would be R950 billion.

    • The cost has been revised down to R17 billion.
    • The admission of the error had Anti-corruption campaigners raising warning signs of more corruption following the pandemic.
    • In addition, Prasa said it has lost an estimated 300km of rail infrastructure in the province. News24
  • SA motorists are welcoming a petrol price cut.

    • However data from the central energy fund indicates the price hikes are far from over.
    • Both Diesel and Petrol remains under pressure as the ZAR started to weaken and oil prices are once again above $100/bl



  • US stock futures drifted lower on Tuesday after Wall Street started the week on a positive note.
  • Traders looking forward to earnings reports from big tech firms.

    • In regular trading on Monday, the major averages reversed early losses to close higher, led by the Nasdaq Composite’s 1.3% rise, while the Dow and the S&P 500 gained 0.7% and 0.6%, respectively.
  • The moves came as tech names rallied in the afternoon amid falling bond yields and ahead of an intense week of earnings for mega cap tech stocks.
  • Twitter also jumped 5.7% after its board accepted Tesla CEO Elon Musk’s offer to take it private.

NB:  Traders await fresh PCE inflation data due Friday to guide the outlook for monetary policy.


  • The 10-year US yield declined toward 2.8%, retreating from an over 3-year high of 2.98% hit last week.
    • Fed policy tightening for now remains a concern. Yields lower after investors piled back into safe-haven bonds.

      • Analysts also flagged concerns on whether the US and global economy can withstand an increasingly hawkish Fed and the commodity-shock caused by the Russia-Ukraine war.
    • US Treasury yields remained near multi-year highs as Fed Powell indicated last week that the central bank is committed to raising rates “expeditiously” to bring down inflation.


  • The Dow added 238 to 34,049
  • The SP500 added 24 to 4,296
  • The Nasdaq  added 165 to 13,004
  • image source: Trading Economics


  • Asian markets traded mixed  on the back of a higher close on Wallstreet.

    • In Japan, the Nikkei 225 rose 0.4% to close at 26, recouping some losses from the previous session.

      • Musk buying Twitter sent tech stocks higher, as Japanese technology stocks tracked overnight gains on Wall Street.
      • China however remains a concern.
    • In China, the Shanghai market initially rose 0.5% to around 2,944, before declining 1.25% to 2,892 , after facing accelerated selling in the previous session.

      • The PBoC said it will keep liquidity reasonably high to ensure stable financial markets and provide support for the nation’s Covid-afflicted economy.
      • The bank also said it will add 100 billion Yuan in relending to support coal development and increase storage capacity.
      • On Monday, the benchmark indexes each plunged more than 5% on fears that Beijing may join Shanghai in Covid lockdowns.  TE
    • Traders ignoring the PBoC pledge to increase support for the economy.
    • However authorities in Beijing expanded virus testing to most of the city, raising concerns about a lockdown of the capital.
    • Energy analysts however firmly of the opinion, that the supply picture remains tight and that bargain hunters appeared to be taking advantage of sharp falls in oil prices. Energy news
  • Gold bounced back above $1,900/oz after a 3-day slide that drove prices below the key psychological level.

    • Gold recovering after a dip in the US dollar as Treasury yields drifted lower.
    • Investors are also monitoring a worsening Covid situation in China after authorities in Beijing expanded virus testing to most of the city.
    • Adding to Gold’s safe haven appeal, Russia told the world not to underestimate the considerable risk of nuclear war.

      • Foreign minister, Lavrov, said it wanted to reduce and warned that conventional Western weapons were legitimate targets in Ukraine. Kitco metal
  • The US dollar eased from a 2-year high scaled in the previous session,

    • On the back of a retreating US yields, down from 3-year highs as investors weighed expectations of faster Fed policy tightening.

      • The dollar steadied at 101.7 on Tuesday after hitting a fresh 2-year high in the previous session.
      • Fed Chair Jerome Powell said last week the central bank is committed to raising rates “expeditiously” to bring down inflation.
    • In Europe, the euro weakened to below $1.075 against a dollar, and failed to get a boost from pro-EU Macron’s re-election.

      • Risk sentiment remains clouded by the war in Ukraine that is entering the third month, surging European inflation. FX news
  • In conflicting statements, Russia said the threat of Nuclear War remains real, but that it could also be exaggerated by the West.

    • Foreign Minister Sergei Lavrov stressing the risks should not be underestimated.

      • And said ; “… the  Risk of nuclear war now ‘very, very significant…”
    • But later added that there was a danger the risks were being “artificially” inflated.
  • In addition, US  Defence Secretary Lloyd Austin, said, Washington wants to see Russia “weakened” as it arms and supports Ukraine, following a visit to Kyiv.

    • It was the first high-level visit to Ukraine from a U.S. official since the war began.


Cases / Deaths / Recoveries

  • WORLD 510,116,702 / 6,245,643  /463,415,800
  • USA 82,733,863 / 1,018,582 / 80,506,936
  • SA 3,764,865 / 100,333 / 3,634,446

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