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Morning NOTE

4 May 2022


The ZAR gained 2.70% in regular trading as exporters took advantage of a weaker Rand following Monday’s sell-off.


  • The Rand recovered all of its Monday losses as commercial export flows returned to the market.
  • Improved liquidity conditions supporting the recovery in the local unit, ahead of today’s FED bank rate announcement.
  • News also, that Monday’s extreme volatility was caused by a “FLASH CRASH”, after Citibank admitted one of their traders issued an incorrect sell order on the Swedish Stock exchange.
    • The sell-order sent global markets in a tailspin with the Stockholm  falling nearly 8% in 5 minutes before recovering to a 1.7% down close.
    • With London on a holiday, this move was exacerbated in thin liquidity conditions.
  • Today, the market fully fixed on the FED tonight, with commercial flows likely to dominate proceedings as speculator.
    • Importers also likely to take advantage of a stronger ZAR after yesterday’s surprise move.
    • NB: the market expecting 50 bps, but focus will be on the language of the FOMC statement after the decision .

Wednesday : 20h00 : FED FOMC rate decision : expected + 50bps

Friday : 14h30 : US NON-FARM PAYROLLS : expected +400k

  • USDZAR :  Expect a range 15.9500-15.6200
    • Importers 15.7100-15.6200
    • Exporters 15.8400-15.9500
  • EURZAR :  Expect a range of 16.8400-16.3800
    • Importers 16.5000-16.3800
    • Exporters 16.7100-16.8400
  • GBPZAR :  Expect a range of 19.9900-19.4200
    • Importers 19.5800-19.4200
    • Exporters 19.7500-19.9900
  • USDZAR 15.7600
  • EURZAR 16.5800
  • GBPZAR 19.6700


  • The strike at Sibanye entered its 7th week.
    • Workers (24,000) continues to strike after their increase of R1,100 was met with R850.
    • Unions rejecting the offer.
    • Sibanye spokesperson, James Wellsted, said the company remains in negotiations and continues to engage with the unions, but we are at a bit of a stalemate. Moneyweb
  • Mining minister, Gwede Mantashe, met with unions bosses after Cyril Rampahosa was booed by workers at his May day rally and speech.
    • CR was heckled and not allowed to complete his speech in Rustenburg. EWN
  • Eskom resumed loadshedding on  Tuesday as the SOE once again face a battle to keep the grid online.
    • In a report , Eskom said the company experiences approximately R2-billion in losses as a result of cable theft.
    • Between all of the SOEs in the country particularly Prasa, Telkom and Eskom it equates to approximately R7-billion losses per annum.


  • US stocks remained flat  in early trading as investors braced for an expected interest rate hike from the Federal Reserve.
    • The language of the FOMC dominating trading floors this morning.
    • Traders focus on the tone watching for an even more hawkish tone from the central bank.
  • The Fed is widely expected to hike rates by a hefty 50 basis points and announce plans to reduce its $9 trillion balance sheet when it concludes its two-day meeting later today.
    • Investors will also watch for any new indications on whether the Fed will continue to hike rates to battle inflation even if the economy weakens.
  • The yield on the US 10YT was at 2.97% ahead of today’s key Fed meeting.
    • Yesterday, 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 and signalling a faster tightening. Source : Federal Reserve
  • The Dow added 67 points to close at 33,128
  • The SP500 added 20  points to close at  4,175
  • The Nasdaq gained 27 points to close at 12,653
  • image source: Trading Economics
  • Asian markets drifting lower as it fails to grab onto the Wallstreet. Traders in Asia remain concerned about China’s 5 week lockdown of Shanghai.
    • In addition talks of Beijing moving into lockdown also gaining momentum. In addition tonight’s FED decision the hottest market news event this year.
    • In Japan, the Nikkei 225 futures fell 0.1% to 26,818, as investors remained cautious ahead of a key Federal Reserve meeting tonight.
      • Tech stocks led the decline, NB: The Nikkei 225 will be closed Tuesday through Thursday for national holidays. TE
  • Crude rose 1% to above $103/bl as industry data showed a drop in US crude and fuel inventories, raising supply concerns and offsetting fears of a demand slowdown from top importer China.
    • The US API reported that US crude stocks fell more than expected by 3.5 million barrels last week, bringing investors’ focus back to ongoing supply tightness.
    • The gains also come on the back of news from Tuesday that the EU is working on new sanctions against Russia that will target its oil industry.
    • In addition, oil prices have come under pressure recently from worries over China’s prolonged Covid lockdowns. Energy News
  • Gold rallied to $1867/oz, but remained near 2 month lows ahead of a key monetary policy decision from the US Federal Reserve.
    • The Fed is widely expected to hike rates by a hefty 50 basis points and announce plans to reduce its $9 trillion balance sheet when it concludes its two-day meeting later today.
    • While a half-percentage point rate increase has largely been priced in by markets, investors will be watching for an even more hawkish bias from the central bank.
    • Bets on more aggressive Fed tightening kept the dollar close to a 20-year high, as the US 10-year yield trades close to the  psychologically important level of 3%. KITCO METALS
  • The US dollar gained to 103.5 ahead of an expected interest rate hike from the FOMC .Traders however watching for an even more hawkish tone than many expect from the central bank.
    • Comments by Fed Chair Jerome Powell after the meeting will also be scrutinized for any new indications on whether the Fed will continue to hike rates to battle rising price pressures even if the economy weakens.
    • Meanwhile, weaker-than-expected quarterly US growth data last week proved little obstacle to the dollar’s rise, and investors hardly adjusted their near-term interest rate bets.
    • Fears of an economic slowdown in Europe and China also drove safe haven flows into the Greenback.  FX News
  • The EU proposed a 6th round of sanctions on Russian but only a gradual reduction of Russian oil imports.
    • Oil remains a stumbling block, especially imposing measures that could reduce, or fully cut, Russian energy supplies to the EU have been a complicated task.
      • This is because the region is reliant on Russia for several sources of energy, including oil.
      • In 2020, Russian oil imports accounted for about 25% of the EU’s crude purchases, according to the region’s statistics office. CNBC
  • US President, Joe Biden, specifically referend the “new” javelin drones and its success against Russian forces.
    • The USA increasing its budget and commitment to send more funds and weapons to Ukraine as it continues to battle the Russian invasion.
    • In addition, the USA appointed a new general to head the US army forces in Europe and Africa. CNN
COVID-19 SOURCE https://www.worldometers.info/coronavirus/ Cases / Deaths / Recoveries
  • WORLD 514,737,844 / 6,265,934 / 469,417,089
  • USA 83,240,101 / 1,021,581 / 80,795,416
  • SA  3,802,198 / 100,377 / 3,661,635
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