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Morning NOTE

29 April 2022


The ZAR weakened to 16,1200 on Thursday on broad-based US dollar rally.


  • The Rand weakened to 16.1200 after the Dollar took off, however Gains were limited after the USA printed a negative Q1 GDP print.
    • Traders now speculating the GDP contraction could lead to the Fed being less aggressive.
    • At the time of writing the ZAR trading at 15.8800, as it rebounds from Thursday’s 18 week lows.
  • The local unit however remaining in the cross-hairs, as the ZAR, is at its lowest since January 4th.
    • A stronger dollar as investors focused on growth risks and rapid US interest rate hikes.
    • Domestically, rolling power cuts, flood damage and signs of a Covid-19 comeback added to worries about the country’s economic outlook.
      • However, expectations of continued monetary policy tightening by the South African Reserve Bank limited further losses.
    • SA PPI  rose 11.9% YOY March of 2022, accelerating from a 10.5 percent increase in the previous month and above market expectations of 10.8 percent.

Today: expect some ZAR gains and also risk asset gains, as traders/investors cover short positions on the final trading session of the month.

  • USDZAR :  Expect a range 15.6800-16.1400
    • Importers 15.8300-15.6800
    • Exporters 16.0100-16.1400
  • EURZAR :  Expect a range of 16.6300-16.9500
    • Importers 16.6700-16.6300
    • Exporters 16.8400-16.9500
  • GBPZAR :  Expect a range of 19.7000-20.1200
    • Importers 19.7900-19.7000
    • Exporters 19.9700-20.12000
  • USDZAR 15.8700
  • EURZAR 16.7200
  • GBPZAR 19.8600


  • Record high SA PPI: Producer prices in South Africa rose 11.9 percent year-on-year in March of 2022.
    • The index accelerating from a 10.5 percent increase in the previous month and above market expectations of 10.8 percent.
    • It was the highest producer inflation since comparable records began in 2013. Stats SA
    • This will no doubt turn the attention to the SARB , who will pay close attention if it filters through into CPI.
      • Such a move will undoubtedly force the SARB hand to once again tighten monetary policy.
  • Hospitality union group (FedHasa), has called on municipalities to lower rates and utility charges to aid recovery in the industry and further boost employment.
    • The group’s MD, Marc Wachsberger, said the tourism industry, had suffered significantly during the wake of the pandemic.
      • He also said the industry is struggling to recover because it is obligated to pay the same rising municipal rates, taxes,
      • As well as inflated utility costs as the sectors that survived and thrived during the pandemic. Moneyweb
  • SA retail giant Clicks Group reported a 26% surge in diluted headline earnings per share (Heps).
    • The results were for the six months ended February 28 2022 on Thursday.
    • The company reported group turnover up 9% to R19.6 billion for the interim period, while retail sales showed a double-digit increase of 13.6%.
    • The group says it has been supported by the country’s ongoing vaccination programme, while its expanding customer base also contributed to the robust performance. Moneyweb
  • SA energy giant SASOL said it is focusing on “green hydrogen” to take advantage of the opportunities provided via the War in Ukraine.
    • Europe’s scramble to find new sources of energy to reduce its reliance on Russia has given Sasol, South Africa’s biggest fuel producer, a new purpose to accelerate its green hydrogen plans.
    • Sasol is focusing on green hydrogen – made by machines called electrolysers that are powered by the wind and sun – in South Africa’s northwest coast.
    • The company is doing a feasibility study that it expects to complete in two years, according to Sasol’s chief executive officer Fleetwood Grobler. Reuters
  • South African Airways (SAA), interim CEO Thomas Kgokolo is to leave the airline at the end of April 2022.
    • Kgokolo was appointed in April last year on an interim basis when SAA exited business rescue.
    • The move allows for the transition to the new 51% shareholder Takatso consortium. EWN


  • US stocks extended gains in the final hour of trading on Thursday.
    • The market rallying on earnings and ignoring negative GDP numbers and inflationary concerns.
    • The Dow up as much as 614 points, the S&P 500 raising 2.5%, and Nasdaq climbing 3.1%.
      • Facebook-owner Meta Platform was more than 18% after the company posted upbeat earnings and user growth
      • Upbeat earnings lifted sentiment, despite an unexpected negative Q1 GDP print of -1.4%.
  • However, after the bell, Apple shares fell after Tim Cook warned of a possible $8 billion hit from supply constraints.
  • The yield on the 10-year US Treasury, consolidated around the 2.85% level.
    • It was not far from a 3-year high of 2.98 touched last week,
    • The theme remains with investors pricing chances of an increasingly hawkish Federal Reserve stance.
  • The Fed meets next week, in the much anticipated FOMC meeting.
  • The Dow added 614 to close at 33,916
  • The SP500 gained 103 points to close at 4,287
  • The Nasdaq gained 382 points to close at 12,871
  • image source: Trading Economics
  • Asian markets trading higher following the rebound on Wallstreet.
      • In addition, the ultra-loose monetary policy and the BOJ’s willingness to continue bond purchases sent stocks price soaring in Japan.
    • In Japan, the Nikkei 225 gained 1.75% to close at 26,848, recovering fully from sharp losses in the previous session.
      • Traders adding to long positions, after the BOJ 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 rose above 7,400 and in turn rising further from a 6 week low touched earlier this week.
      • Traders now turning its attention to next week RBA meeting after red-hot Aussie inflation data spooked the market.
      • Analysts now bringing forward their timeline for a 15 bps increase by the Central Bank. TE
    • The US oil benchmark is heading for its fifth straight monthly gain after another volatile period marked.
    • Traders citing, the geopolitically driven supply disruptions and Covid-induced demand slowdown in China.
      • The Russia-Ukraine war has entered its third month despite diplomatic efforts for a ceasefire
      • Russia has also recently halted gas supplies to Bulgaria and Poland after the EU-member countries refused to pay gas imports in Rubles.
      • Lockdowns in China also weighing on demand from the world’s biggest crude importer. ENERGY NEWS
  • Gold prices recovered to trade above $1,900/oz.
    • Earlier the yellow metal had slipped below $1,880/oz and in turn hit a 2 month low.
    • General US Dollar strength cited as the reasons, fueled by the expectations that the Federal Reserve will be more hawkish than peers.
    • 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 tested the 104 mark for the first time since December 2002.
    • Traders betting that the Fed would deliver the first of many 50bps interest rate hikes next week to curb inflation.
    • A tightening jobs market reinforced such a view, with initial claims for unemployment benefits remaining at historically low levels.
    • Safe-haven buying also adding to Greenback strength, after authorities in Beijing expanded virus testing to most of the city, raising concerns about a lockdown of the capital.
    • Meanwhile, the American economy unexpectedly contracted an annualized 1.4% in Q1 of 2022. FX NEWS
  • Conflicting Central bank views leads to chaos in the currency markets:

  • The Japanese yen hit the key 130 /$ mark on Thursday for the first time since April 2002.
    • 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 BOJ’s firm dovish stance stood in stark contrast with the Federal Reserve, which is expected to aggressively hike interest rates.
  • The Euro traded below 1.0500 and continues to slide as ECB President Lagarde said the exact end-date for the APP hasn’t been determined.
    • Also, the timeline for potential increases in interest rates has not been set, contradicting board member Guindos.
    • The ECB however noted, inflation pressures have intensified and inflation has increased significantly and will remain high over the coming months.
  • Russia’s President Vladimir Putin has warned the West of a “lightning fast” response to any country that intervenes in its war against Ukraine and creates what he called “strategic threats for Russia.”
  • U.S. President Joe Biden has asked Congress to approve $33 billion in additional money for the Ukraine war, which includes funding for U.S. military support to the embattled nation and a mix of direct cash and supplies for Ukraine. Reuters
  • Also, U.S. President Joe Biden said he will visit a Lockheed Martin plant in Troy, Ala. on Tuesday to thank the workers who are manufacturing Javelin missiles being sent to Ukraine. NBC
  • In dismissing threats from Putin, NATO Secretary-General Jens Stoltenberg said Finland and Sweden would be “welcomed with open arms to NATO” .
    • “It’s their decision,” Stoltenberg said. “But if they decide to apply, Finland and Sweden will be warmly welcomed, and I expect that process to go quickly,” he said, without offering a timeline.
    • He said the Nordic nations are NATO’s closest partners and already have “strong and mature democracies.” CNN
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 / 100,351 / 3,638,087
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