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Morning NOTE

28 June 2022


The ZAR consolidated its hard earned gains below R16.000/$ following a strong showing last week.


  • The Rand managed to hold onto its gains, even after Wall street reversed its earlier gains.
    • Higher than expected US durable goods spooked the market, allowing for losses to 15.9300 before the market recovered to trade at 15.8200.
  • Inflation remains the key theme and this week’s US GDP growth numbers will continued to be a factor as investors look toward future FED policy.
    • Traders remain of the opinion that the Fed has gone too far and that inflation might have peaked, resulting in a strong RETURN TO RISK rally.
  • In this environment the ZAR likely to trade stronger and earn more hard yards, even in the face of the ESKOM energy crises.

This week on the data front

  • Yesterday  :
    • 14h30 : US durable goods reported at +0.7% vs  f/cast of -0.3% % vs +0.4% MoM .
      • The data showed a third straight month of gains and that business spending plans remain strong so far despite higher interest rates and inflation.
  • Wednesday :

    • 14h30 : US GDP growth QoQ -1.5% expected vs +6.9% previous
    • 15h00 :  ECB’s Lagarde and FED’s Powell once again on the speakers circuit.
      • NB:  This will likely add to volatility.
  • Thursday :

    • 11h30  : SA PPI with 14.7% expected Yoy vs 13.7% previous
    • 14h00 :  SA trade balance for MAY, f/cast is +R12bn vs +R15.49bn previous.
  • Today :
    • Following the profit talking session on Wall street.
    • Look for range trading today, BUT the ZAR still on the front foot and we can  expect some more for the local unit.
    • We also have SARB risk with high PPI data expected later in the week.
  • NB: With Risk rallying, it is highly unlikely that the ZAR will weaken significantly and we are now firmly below the 16 pivot.
  • USDZAR :  Expect a range 15.7300-15.9600
    • Importers 15.8000-15.7300
    • Exporters 15.8900-15.9600
  • EURZAR :  Expect a range of 16.5900-16.8600
    • Importers 16.7000-16.5900
    • Exporters 16.7900-16.8600
  • GBPZAR :  Expect a range of 19.3100-19.5700
    • Importers 19.3800-19.3100
    • Exporters 19.4800-19.5700


  • USDZAR 15.8300
  • EURZAR 16.7500
  • GBPZAR 19.4200


Power crises:

  • Police have recovered stolen Eskom cables worth an estimated R2.5 million .
    • The cables went missing after a truck that was transporting the power utility’s electrical overhead cables was high-jacked in Piketberg last month.
    • The suspected cable thieves were tracked down in Cape Town and detectives traced the stolen cables at a storage facility in Blackheath.
  • The City of Tshwane on Monday said several key institutions in the capital were currently experiencing power outages.
    • Officials said it was because of flooding that occurred at the city’s substation last Wednesday.
    • The substation is housed in the basement of the Gauteng provincial government offices on the corner of Bosman and Pretorius streets.
  • Stage 4 load shedding is expected to last until Wednesday.
    • Eskom said some workers failed to report for duty at various stations, leading to delays in planned maintenance and repairs.
    • The SOE also said the illegal wildcat strikes at some of its power stations is tantamount to sabotage and the public is being forced to bear the brunt.


  • Naspers jumps nearly 23% on results and share buyback proposal while  Prosus also ended the day up 18.9%.
    • Traders citing a vote of confidence in management’s announcement that the companies will steadily sell down their stake in Tencent.
      • Resulting in a return of  the proceeds to shareholders by way of buying back Naspers and Prosus shares.
    • Not only did the share prices of the two companies increase sharply, but record volumes traded on the JSE on Monday.



  • Monday saw minor losses on the main indices traded in New York.
    • This following a strong rally into the close last week, allowing investors looked to book short term gains.
  • US stock futures slipped further on Tuesday after closing the previous session lower, as technology shares came under renewed selling pressure.
    • Dow futures shed 0.1%, S&P 500 futures fell 0.2% and Nasdaq 100 futures lost 0.3%.


  • The US 10Y yield rebounded following stronger than expected US Durable goods orders.
    • The yield consolidated above 3.1%, bouncing further from a two-week low of 3.0% as investors assessed the outlook for monetary policy ahead of the US PCE reading for May due later this week.
    • Last week, Powell reassured markets that the US central bank is fully committed to controlling prices, even at the risk of an economic slowdown.
    • Now, investors will be looking to the Federal Reserve’s preferred measure of inflation, which could provide further cues on its policy tightening path. Source : US Treasury


  • The Dow reversed its gains to close down -62 to 31,438
  • The SP500 fell 11 points to  3,900
  • The Nasdaq declined 83 to 11,524

Futures Trading:

  • image : Trading economics


  • Asian markets lower following the late reversal on Wallstreet.
    • In Japan, the Nikkei 225 fell 0.2% to around 26,819 in mixed trade on Tuesday, as gains in commodity-linked stocks countered losses in technology shares.
      • Equities also took a breather following a strong rebound last week as an increasing risk of a global recession spurred by aggressive central bank tightening.
      • Gains in the commodities sector were led by Nippon Steel (1.4%), but overnight declines on Wall Street weighed on local technology shares.
    • In China, the Shanghai Composite were little changed around 3,379, but still near its highest levels in almost 4 months, as investors looked to take profits following a sustained rally in mainland stocks.
      • Those gains came on the back of expectations that China’s economy will recover from Covid-induced lockdowns as the country’s policy turns more accommodative.
      • Meanwhile, equities traded cautiously as an increasing risk of a global recession spurred by aggressive central bank tightening aimed at stamping inflation loomed over the markets.
  • Crude oil
    • WTI oil traded near $111 a barrel while Brent crude was above $116/bl.
      • Oil prices climbed over 1% on Tuesday, extending gains for the third straight session.
      • The news that two major producers — Saudi Arabia and the UAE — are reportedly very close to their near-term capacity limits.
        • New G7 sanctions that include a plan to cap the price of Russian oil, also adding to the price spike.
      • Earlier, UAE Energy Ministers said the country was producing near maximum capacity based on its quota of 3.168 million barrels per day under the agreement with OPEC+.
      • This confirmed remarks by French President Emmanuel Macron who told US President Joe Biden that UAE and Saudi Arabia, previously perceived as the only two countries in the OPEC with spare capacity, can barely increase oil production. Source Energy News
  • Gold declined to $1826/oz, after rising to as high as $1,840 earlier in the session.
    • The theme continued as investors weigh expectations that major central banks will continue to aggressively raise interest rates to target runaway inflation.
    • In addition, reports that some G7 member countries are planning to officially ban new bullion imports from Russia for its invasion of Ukraine.
    • The UK, along with the US, Japan and Canada, considered the measure given London’s central role in the gold trade.
    • It will negatively impact Moscow’s ability to raise funds.
      • However, some analysts argued that shipments between Russia and London have already dropped to nearly zero since western countries imposed sanctions on Moscow. Kitco metals
  • The US Dollar traded below 104, extending last week’s declines, on expectations that the Federal Reserve won’t need to go as far as previously thought.
    • This on the back of signs that inflationary pressures have started to ease.
    • The revision in the inflation outlook comes at a time when raw material and oil prices are set for a significant drop on a monthly basis.
      • The first in oil prices this year, and the steepest in copper prices since March 2020.
    • This after Fed Chair Jerome Powell suggested that a recession could be possible as the FOMC was focused on curbing inflation, and a slew of weak economic data.
    • Later this week, the focus will be on personal consumption expenditure data from May, which includes the Fed’s preferred inflation gauge and the evolution of personal spending in the US, for more clues on the inflation and interest rate outlook. FX news

COVID-19 SOURCE https://www.worldometers.info/coronavirus/

Cases / Deaths / Recoveries

  • WORLD 549,822,960 / 6,352,153 / 525,648,550
  • USA 88,910,140 / 1,041,027 / 84,604,107
  • SA 3,992,661 / 101,740 / 3,877,949

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