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Morning NOTE

3 May 2022


The ZAR weakened  to 16.1900, in thin holiday trading after a spike in US yields sent the Dollar higher across the board.


  • The Rand tracked major currencies weaker against the Dollar after US 10YT spike to breach 3.00% for the first time since Dec’2018.

  • Risk off sentiment hitting global markets as US stocks fell (before recovering at the close).

    • Investors now convinced the FED will tighten by 50 bps on Wednesday after last week saw another hot inflation reading.
  • The US Fed’s preferred inflation gauge’s Core Personal Consumption Expenditures (PCE) price index advancing 5.2% from a year ago.

    • With inflation running at 40-year highs and the job market extremely tight, the Federal Reserve had no choice but to change the narrative, signalling faster tightening.
  • Investors also nervously watching the pollical landscape after Ramaphosa was prevented from speaking at a workers rally.

    • This particularly important with the upcoming ANC leadership battle at the end of the year.
  • Key data releases are all from the USA this week.
    • Wednesday : 20h00 : FED FOMC rate decision  :  expected + 50bps
    • Friday :  14h30 : US NON-FARM PAYROLLS : expected +400k
  • Today, expect some early session ZAR gains, as exporters take advantage of elevated rates (15.87 on Friday).
    • A floor around 15.9500, will allow importers to exact cover.
    • The risk remains to the topside until the FED decision, where we could see a pullback depending the language of the FOMC.
  • USDZAR :  Expect a range 15.9500-16.2400
    • Importers 15.8300-15.6800
    • Exporters 16.1400-16.2400
  • EURZAR :  Expect a range of 16.7100-17.0300

    • Importers 16.8600-16.7100
    • Exporters 16.9600-17.0300
  • GBPZAR :  Expect a range of 19.8800-20.3300

    • Importers 20.0300-19.8800
    • Exporters 20.2200-20.3300


  • USDZAR 16.0900
  • EURZAR 16.9100
  • GBPZAR 20.1300


  • DA Leader Steenhuisen landed in the Ukraine on a fact finding mission. The Leader of the opposition, “ wanted to see for himself”.

    • Steenhuisen said the knock-on effects of the war were hard felt in SA , as Fuel prices continue to spike.
    • He concluded, in the era of fake news, “…”We owe it to the people of Ukraine to tell the unfiltered truth about what is taking place there…” NEWS 24
  • Andrew Levy, a labour economist said the future of labour unions does not look good unless they are able to reinvent themselves.

    • He said “… If we look worldwide, unionism is not the currency of the 21st century and in SA, membership has dropped significantly with all the job losses. EWN
  • South Africa has recorded 3,838 new COVID-19 cases in the past 24 hours.

    • This is a representation of 22% positivity rate of infections in the latest period under review.
    • ZERO deaths were however reported, with the current number at 100,370
  • South Africa’s President Cyril Ramaphosa had to leave a May Day rally after workers stormed the stage where he was speaking.

    • Chanting “Cyril must go,” they held up signs demanding a wage increase during a ceremony in a stadium near the north-western city of Rustenburg.
    • Workers striking at the nearby Sibanye gold mine disrupted the event.  BBC



  • US stock climbed on Tuesday after the major averages staged a sharp intraday reversal to end higher overnight.
  • In the USA session on Monday, the tech-heavy Nasdaq Composite jumped 1.63% in a late-day comeback, despite falling as much as 1.07% earlier in the session.
  • The Federal Reserve is widely expected to raise interest rates by 50 basis points this week, with some analysts believing expectations of aggressive monetary tightening are already priced into markets.
  • Meanwhile, the earnings season continues with Pfizer, Airbnb, AMD, Lyft and Starbucks set to report Tuesday, among others


  • The yield on the 10-year US Treasury, topped 3% for the first time since December 2018.

    • Investors doubled down on bets that the Federal Reserve will deliver the first of many 50bps interest rate hikes this year.
    • With inflation running at 40-year highs and the job market extremely tight, the Federal Reserve had no choice but to change the narrative, signalling a faster tightening. source: U.S. Department of the Treasury


  • The Dow gained 84 to 33,061
  • The SP500 added 23 to 4,155
  • The Nasdaq added 201 to 12,536
  • image source: Trading Economics


  • Asian markets lower ahead of tomorrows FED meeting.

    • In Japan the Nikkei 225 Index eased 0.1% to 26,818, after posting strong gains in the previous session, as investors remained cautious ahead of a key Federal Reserve meeting later this week.

      • Locally, a private survey showed over 40% of Japanese companies are planning to raise prices within a year amid rising material costs driven by the pandemic and the Ukraine war.
    • In Australia the RBA surprised the market by hiking 25 bps vs an expectation of 15 bps.

      • The ASX 200 Index fell 0.42% to close at 7,316, extending losses in the previous session.
      • Traders citing the RBA raising its official cash rate for the first time in more than 10 years, in response to surging inflation, and signalled more rate increases to come.
      • Iron-ore miners and steel-producing firms led the decline. TE
  • Crude oil rose above $105/bl  after settling higher in the previous session.

    • Traders citing increased demand for refined products exceeding fears of Covid-induced demand slowdown in top importer China.
    • Global supply remains under pressure on the shunning of Russian cargoes.
    • Meanwhile, traders tracked developments around the EU as it is reportedly leaning toward banning Russian oil imports by the end of year,
    • Oil prices have climbed in the past five months as Russia’s invasion of Ukraine exacerbated supply disruptions caused by the Covid pandemic.

      • Earlier, Iran and Venezuela met to discuss their situation regarding sanctions and oil productions. Energy News
  • Gold traded at $1855/oz , hovering near its lowest levels since mid-February, as expectations for a half-point interest rate increase from the Federal Reserve this week pushed Treasury yields higher.

    • The spike in yields  pressuring bullion prices.
    • On Monday, the US 10-year US yield hit 3%; for the first time since December 2018.
    • Traders see this as a psychological milestone that could have major implications for other financial markets.
    • The dollar index also held near 20-year highs on rate hike bets and safe haven inflows, denting demand further for the precious metal. Kitco metals
  • The dollar hit 103.60 and in turn settling near a 19-year high hit last week, as traders prepared for a key Fed meeting tomorrow.

    • Investors widely expect the FED to raise interest rates by a hefty 50 basis points.
    • The spike in PCE data, the Fed inflation measure, dominated investors sentiment and traders largely ignored, the weaker-than-expected Q1 US growth data.
    • In addition, fears of an economic slowdown in Europe and China driven by the Ukraine war and Covid lockdowns, respectively, spurred safe haven flows into the dollar. FX news
  • SA DA leader Steenhuisen is visiting the Ukraine on a fact finding mission. EWN
  • The U.K. will pledge more rapid arms supplies for Ukraine as the country tries to fend off a renewed Russian assault in the east and south.
  • On Tuesday, the U.K.’s Prime Minister Boris Johnson announce a new £300 million ($375 million) package of defensive military aid while addressing the Ukrainian parliament via videolink. BBC
  • A senior U.S. Defence official said at a briefing that Ukraine’s forces have “managed to push the Russians out about 40 kilometers [25 miles] to the east of Kharkiv.” The city is still under aerial bombardment.
  • Kharkiv has been under sustained attack since late February, and most its civilian residents have fled the city. CNBC

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

Cases / Deaths / Recoveries

  • WORLD 514,017,386 / 6,263,363 / 468,644,823
  • USA 83,170,407 / 1,021,089 / 80,757,424
  • SA 3,798,413 / 100,370 / 3,651,665

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