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Morning NOTE

28 April 2022


The ZAR weakened to a 16 week low to trade at 15.9900 on the back of a surging US Dollar.


  • The Rand weakened on the back of major Dollar bull-run across the board.
  • The Euro falling below 1.0600 to trade at 1.0517 and register a 5 year low vs the buck.
  • Traders citing a divergence in monetary policy between the US FED and the ECB.
    • Adding to the negative risk sentiment was an escalation of the energy crisis in Europe, after Russia halted gas flows to Poland and Bulgaria.
    • It also said, it would remain cut until the countries agree to pay in Rubles.
  • FX markets for now ignoring the Risk rally (stocks higher on earnings), and focussing squarely on the FED’s ultra-hawkish pivot.
    • Resulting in Dollar rally with the index hitting 103.
  • On the data front,
    • 11h30: Stats SA releases ZA PPI: expected 10.8%
    • 14h30: US GDP 14h30 ,expected 1.1%
  • Today:  The ZAR higher due to thin liquidity conditions. A failure to break 16.0000, likely to see lower as exporters take advantage of levels.
    • Opening up a possibility of 15.8000.
    • NB: a break of 16.000 targets 16.1500, most likely if EURUSD breaks through 1.0500.
  • USDZAR :  Expect a range 15.7100-16.1500
    • Importers 15.85500-15.7100
    • Exporters 15.9900-16.1400
  • EURZAR :  Expect a range of 16.6300-16.9500
    • Importers 16.7000-16.6300
    • Exporters 16.8600-16.950
  • GBPZAR :  Expect a range of 19.7000-20.1200
    • Importers 19.8600-19.7000
    • Exporters 20.0000-20.12000
  • USDZAR 15.92000
  • EURZAR 16.7600
  • GBPZAR 19.9200


  • Eskom continued to remind SA that the grid remains under pressure although, loadhshedding has been suspended.
    • In addition, The DA wants parliament to suspend Mkhuleko Hlengwa, chair of the standing committee on public accounts.
    • This after his heated exchange with Eskom board member Busisiwe Mavuso on Friday.
    • The party is accusing Hlengwa of bias and being rude to Mavuso. The Sunday Times.
  • At the ANC NEC, Ramaphosa’s support appeared to be declining.
    • Some of the ANC members affected by the step aside resolution have viewed this as being rejected by the current leadership.
    • In other areas some members are now seeking to now join forces with those opposed to party president, Cyril Ramaphosa, and his allies.
  • Two announcements from JSE-listed mining companies in the last week have revealed how much just four of the executive directors earn.
    • It was announced – two CEOs, a CFO and a COO – will receive in excess of R700 million in guaranteed compensation for last year and this.
    • The news likely to continue the strikes at Sibanye-stillwater where employees are looking for a wage increase.


  • Stocks jumped on Thursday as investors reacted positively to an earnings report from Meta Platforms.
  • Nasdaq 100 futures rallied 1.2%, while S&P 500 and Dow futures gained 0.8% and 0.2%, respectively.
    • The moves came as shares of Meta surged 18.4% in after hours trading on an earnings beat and a growth in daily users, providing some relief in the beaten-up tech sector.
    • Big tech setting off demand for growth stocks.
  • In regular trading on Wednesday, the tech-heavy Nasdaq Composite inched lower by 0.01%, while the Dow and S&P 500 each gained 0.2%.
    • Companies set to report earnings on Thursday include Apple, Amazon, Twitter and Robinhood, among others.
  • The US bond market 10YT remained at 2.80%, as inflation hawk selling were offset by Safe haven buying on the back of the WAR in Ukraine.
  • The stalemate causing a pause in the yield spike.
  • Recall: Fed chair Powell said, the central bank is committed to raising rates “expeditiously” to bring down inflation.
  • He added that a 50-basis point interest rate increase was “on the table” for May. source: U.S. Department of the Treasury
  • The Dow added 61 points to close at 33,301
  • The SP500 added 8 points to close at 4,183
  • The Nasdaq traded flat at 12,488
  • image source: Trading Economics
  • Asian markets all higher after a rebound on Wallstreet after US equities gained on the back of strong corporate earnings .
    • In Japan, the Nikkei 225 Index jumped 1.75% to close at 26,848, recovering fully from sharp losses in the previous session.
      • In addition the Wallstreet boosts, stocks jumped  after the Bank of Japan doubled down on its massive stimulus program and a pledge to keep interest rates ultra-low to support a fragile economy.
      • The central bank said it will offer to buy unlimited amounts of 10-year government bonds to defend an implicit 0.25% yield cap around its zero target every market day.
    • In Australia, the ASX 200 Index gained 1.3% to close at 7,357 on Thursday, lifted by export-reliant mining stocks as concerns over a global economic slowdown and China’s Covid outbreak appeared to ease.
      • The moves came a day after red-hot inflation data in Australia raised fears that interest rates could rise from record lows as soon as next week, adding pressure to equity prices. TE
      • Investors also digested robust trade data in Australia which highlighted strong global demand in the first quarter of this year amid the lifting of Covid-19 restrictions and soaring commodity prices.
  • Crude oil, declined to $100 a barrel.
    •  Traders citing a Fed induced slowdown due to rate hikes and the demand situation around China and lockdowns.
      • State media reported Beijing reported increasing virus cases as it recently began a mass testing program aimed at containing a new outbreak.
    • Analysts believe an advance is due, after Russian energy giant Gazprom on Wednesday halted gas supplies to Bulgaria and Poland .
      • The EU-member countries refused to pay gas imports in Rubles.
      • The move escalating an energy crisis in Europe at a time the EU is considering a ban on Russian crude. Energy News
  • Gold prices fell below $1,880 /oz, and in turn seeing its lowest in over two months amid a general US dollar strength.
    • The US currency fueled by the expectations that the Fed will be more hawkish than peers.
    • The Buck also supported by safe-haven flows fanned by concerns over slowing growth in China and Europe.
    • Analysts suggested that recent currency moves indicated a flight to safety out of other currencies into the US dollar, putting downward pressure on bullion prices. Kitco Metals
  • The US dollar index broke above the 103 level for the first time since January 2017.
    • Traders citing faster Federal Reserve policy tightening and safe haven buying because of China’s Covid-19 lockdowns and war in Ukraine.
      • The most pronounced buying activity was against the Euro, which tumbled to levels not seen since April 2017 against the greenback, given the worsening outlook for growth and inflation due to the war in Ukraine.
    • EURUSD decreased to a 5-year low of 1.0516, amid the weak economic prospects in Europe and huge differences in monetary policy reactions in the US and the Eurozone. Forex news
  • Russia’s President Vladimir Putin has warned the West of a “lightning fast” response to any country intervening in the Ukraine war and creating “strategic threats for Russia.”
    • Also, Russia shocked the European community by halting gas supplies to Poland and Bulgaria on Wednesday because they had refused to pay for the gas in Russian rubles, as Moscow demanded. CNBC
  • The UK estimates the Russian have lost close to 580 tanks, due to a flaw in its ammunition storage.
    • The implication is that even a “non” lethal hit, could disturb tank ammunition inside the tank causing it to explode.
    • It’s a tactic used by the Ukrainians. Reuters
COVID-19 SOURCE Cases / Deaths / Recoveries
  • WORLD 511,599,167 / 6,253,610 / 465,318,900
  • USA 82,888,247 / 1,019,774 / 80,585,919
  • SA 3,776,298 / 10,351 / 3,638,087
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