The ZAR recovered on the back of positive Risk Asset sentiment after a strong performance on Wall Street.
Significant data this week;
Next week (… and just when you thought it was safe to get back in the water ).
- 14h30 : US NON-FARM PAYROLLS +250K expected vs 372k previous
- 14h30 : US UNEMPLOYMENT RATE 3.6% expected vs 3.6% previous
- 14h30 : US INFLATION YOY JULY 2022 , EXPECTED 8.9% VS 9.1% PREVIOUS
- 14h30 : US CORE INFLATION YOY JULY 2022 , EXPECTED 6.1% VS 5.9% PREVIOUS
- 11H30 : SA MINING AND MANUFACTURING DATA.
- Expect some early session weakness as importers take advantage of the a stronger ZAR and market makers look to clean out some stops for weak shorts.
- All eyes remain on the today’s NFP, with a surprise in any direction likely to drive the Dollar and in turn the ZAR ‘s direction.
- A better than expected jobs report ( > 250k ) will likely see a weaker ZAR, as US yields will spike as it confirms the FED’s stance.
- Likewise, a poorer jobs report ( < 250k) , will see ZAR gains, and a drop in US yields, as markets likely to raise bets of a FED PIVOT
- USDZAR : Expect a range 16.5300-16.6800
- Importers 16.5800-16.5300
- Exporters 16.6500-16.6800
- EURZAR : Expect a range of 16.8600-17.1100
- Importers 16.9800-16.8600
- Exporters 17.0300-17.1100
- GBPZAR : Expect a range of 20.0500-20.3800
- Importers 20.1300-20.0500
- Exporters 20.2900-20.3800
- USDZAR 16.6300
- EURZAR 17.0100
- GBPZAR 20.1800
- With many union leaders saying there is no appetite for a strike in the public service given the losses workers would incur amid the cost of living crisis.
- Cosatu’s public sector unions met with Acting Public Service and Administration Minister on Thursday night to try and prevent a looming stalemate over wage increases.
- On Friday morning, unions will officially table workers’ rejection of a 2% wage hike offer by government.
- Instead, they want at least 4% and would settle at the 3%, which was the rate of salary adjustments for public office bearers, including ministers earlier this year. EWN
- Eskom announced increased levels of load shedding after news reports that KOEBERG UNIT 2’s startup was delayed again.
- On the back of the government’s move towards renewables, given the current energy crises, it has emerged that US investors are looking for investment opportunities in SA.
- US investors with more than $1 trillion (nearly R17 trillion) of assets under management are in South Africa to look for investment opportunities.
- The visit being facilitated by USAID and Prosper Africa, the US government’s initiative to increase trade and investment between African nations and America.
- It will coincide with US Secretary of State Antony Blinken’s trip, who arrives in SA on Sunday. NEWS24
- Minister of Home Affairs Aaron Motsoaledi included 41 specialised healthcare professional codes to the critical skills list.
- This will see a range of healthcare professionals outside the country prioritised in South Africa’s expatriate migration system.
- Six categories of specialist nurses were included in the latest critical skills list, including trauma, paediatric, and midwifery nurses.
- The move is widely seen as a proactive response to the shortage of healthcare specialists in the South African job market.
- A shortage of nurses in the healthcare sector has even affected private hospitals.
- In regular trading on Thursday, the Dow and S&P 500 shed 0.26% and 0.08%, respectively, while the tech-heavy Nasdaq rose 0.41%.
- The S&P 500 and Nasdaq Composite are on track to post a third straight week of gains, while the Dow is set to snap a two-week advance.
- This morning in light Asian trading, US stock futures were little changed, as investors looked ahead to the highly anticipated jobs report.
- It could give fresh insight on the state of the economy and further clues on the Fed rate path.
- Futures contracts tied to the three major index drifted flat to slightly positive.
- The jobs report :
- The US non-farm payrolls number for July due Friday is expected to come in at 250,000, and any surprise on either side could impact expectations on the Fed’s next policy move.
- The 10-year US yield retreated to the 2.7% level, closing in on its lowest level since April.
- Hawkish comments from Federal Reserve policymakers shifted investors’ focus to further monetary tightening.
- The central bank has reassured markets that it remains fully committed to taming inflation (CPI currently at 40 year high’s).
- The Fed’s campaign to do whatever it takes to bring down inflation to the 2% target brought the gap between 2-year and 10-year Treasury yields to an extreme of almost 40 bps.
- The gap hasn’t been seen since 2000.
- The Dow declined 85 points to 32,726
- The SP500 fell 3.23 points to 4,151
- The Nasdaq gained 52 to 12,720
- image : Trading economics
- Asian markets well bid across the region ahead of today’s non farm payrolls.
- In Japan, the Nikkei 225 rose 0.87% to close at a 2-month high of 28,176, with both benchmarks finishing the week modestly higher.
- Traders navigated another volatile week marked by :
- solid corporate earnings,
- mixed global economic data,
- hawkish Federal Reserve commentary
- and heightened US-China tensions.
- Meanwhile, investors remained cautious following reports that Chinese missiles landed in Japan’s exclusive economic zone.
- Crude Oil declined below $90/bl to hit $88/bl as demand concerns continue to weigh on prices.
- Prices are down 10% this week, hitting the lowest levels in six months on growing concerns that a global economic slowdown has precipitated a demand destruction.
- Official data showed that US crude inventories expanded significantly last week despite expectations for a decline.
- In addition, US gasoline demand dropped well below pre-Covid seasonal norms.
- This week’s slump also came even after Saudi Arabia raised oil prices for Asian buyers to a record.
- …. and despite OPEC’s decision to raise oil output scantily for September and warning of “severely limited” spare capacity.
- Gold rallied to $1,790/oz Friday, hovering at its highest levels in a month.
- Bullion is up about 1.4% so far this week and is on track for a third consecutive weekly rise.
- The Bank of England delivered its biggest rate hike in 27 years and warned that the UK is set to enter recession in the fourth quarter.
- Investors are also bracing for a key US jobs report that could provide clues on the Federal Reserve’s tightening path .
- Meanwhile, markets continued to monitor escalating geopolitical tensions in the Asian region, with China reportedly firing a barrage of ballistic missiles into the waters around Taiwan.
- The US DOLLAR Declined further on the back of lower treasury yields.
- The Dollar below 106 at 105.86 after facing increased volatility earlier this week.
- Traders are preparing for today’s key jobs report that could guide the outlook for US monetary policy.
- The US non-farm payrolls number for July due on Friday is expected to come in at 250,000, and a surprise on either side could impact expectations on the Federal Reserve’s next policy move.
- The Dollar started to weaken in mid-July amid speculations that the US central bank may raise interest rates less aggressively in the coming months to avoid a recession.