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Morning NOTE

6 June 2022


The ZAR weakened on the back of stronger than expected Non-farm payrolls data on Friday.


  • The Rand lost ground from 15.3800 to reach 15.5700 , after the NFP jobs reported exceeded market expectations.
    • Markets initially seeing the news as bearish and confirmation of the FED’s path towards neutral rates, widely expected at 3.00%.
    • The average wage growth however lower providing some support to investors looking for value trades.
  • This morning equity futures higher in Asia and leading to support for Risk assets including the ZAR.
    • The Rand opening trading at 15.4800, recovering 0.57% in Asian markets.

This week on the data front :

  • Tuesday :
    • 11H30 : SA GDP growth for Q1, with YOY expected at 2.3% vs 1.7% previous.
  • Thursday :

    • 11h00 SA current account (trade) Q1, with R150bn expected vs R120bn previous.
    • 11H30 SA Mining production April, -7% expected vs -9.3% previous.
    • 13h00: SA manufacturing April, -1.7% vs -0.8%
  • Friday


    • 14H30 :  US CPI  8.3% expected vs 8.3% previous
    • 14H30 :  US CORE CPI  5.9% expected vs 6.2% previous
  • On the radar, Oil prices hitting $120/bl after the Saudi’s raised the official selling price for its flagship Arab light crude bound for its main Asian market and to northwest Europe.
    • while holding the premium steady for barrels going to the US.
  • Today:  Expect more ZAR gains as the Rand rebounds ahead of this week’s KEY US  inflation report.
    • Investors anticipating inflation has topped out, as the economy slows down, that will ultimately result in a drop in “aggregate demand” across the board, easing inflationary pressures.
  • USDZAR :  Expect a range 15.3800-15.6200
    • Importers 15.4300-15.3800
    • Exporters 15.5400-15.6200
  • EURZAR :  Expect a range of 16.5100-16.6900
    • Importers 16.5600-16.5100
    • Exporters 16.6600-16.6900 
  • GBPZAR :  Expect a range of 19.2500-19.5300
    • Importers 19.3300-19.2500
    • Exporters 19.4000-19.5300
  • USDZAR 15.4800
  • EURZAR 16.6000
  • GBPZAR 19.3500


  • African National Congress (ANC) president Cyril Ramaphosa is staying silent on details of an investigation into a suspicious robbery at his Limpopo farm.
    • But he has given, what he calls, “a little bit of colour” on the 2020 heist.
    • However, the story continues, as former State Security director-general Arthur Fraser –
      • “…said the millions of “undeclared” US dollars at the centre of the former prison boss’s new criminal claims against the president,
      • were simply stashed away inside pieces of furniture at his Phala Phala game farm. EWN
  • Ramaphosa, cited the suspension of the fuel levy indefinitely is not on the cards.
    • Since the suspension of the levy comes at a significant cost to public finances, which affects other programmes of government, it will be difficult to continue this indefinitely.
    • He cited, there are other things we can do. Improving our nation’s food security is vital to withstanding this and future shocks.
    • He mentioned investment into agricultural production and strengthen SA’s  food sovereignty. News 24
  • According to Ratings Afrika, SA’s municipal sector is about to collapse.
    • With the exception of the Western Cape.
      • “The South African municipal sector [except the Western Cape] is about to collapse financially, and it is time for the government to acknowledge it seriously and start taking the necessary steps to save the country from disaster,” says the latest MFSI report, covering the financial year ended June 2021.”  Moneyweb



  • US stock futures rose on Monday after a losing week on Wall Street, as a robust jobs report bolstered the Federal Reserve’s aggressive stance against surging inflation.
  • The moves followed another disappointing week for investors, with the Dow falling 0.9%, while the S&P 500 and Nasdaq Composite lost 1.2% and 1%, respectively.
  • Investors digested data which showed the US economy added 390,000 jobs in May, coming in higher than expected and opening the door for the Fed to remain aggressive.
    • Markets have been grappling with fears that the central bank’s assertive stance on inflation would tilt the economy into a recession.
  • Fed officials also indicated readiness in recent statements to keep hiking rates until inflation recedes.
  • This week, investors will be focused on the May CPI reading to be released on Friday to gauge whether US inflation has peaked.
  • US 10 Year Yield was 2.94 % as traders digest Friday’s NFP report ahead of Fridays’ CPI, source: U.S. Department of the Treasury
    • In the UK, the 10-year Gilt broke above 2.1% for the first time since July 2015.
      • Traders betting on expectations of higher interest rates despite concerns of economic slowdown.
      • Markets are pricing in 138bps of BoE rate hikes by year-end, as inflation runs at 40-year highs and is expected to hit double digits in Q3.
      • The latest data showed manufacturing activity expanded in May the least since January 2021, as traders expect a recession.
      • UK markets will be closed on Thursday and Friday for Queen Elizabeth’s Platinum Jubilee.
  • The Dow declined 348 to 32,899
  • The SP500 declined 68 to 4,108
  • The Nasdaq fell 304 to 12,012
Futures Trading:
  • image : Trading economics
  • Asian markets rallying strongly after Chinese stocks posted a 7 month high.
    • The Shanghai Composite rose 0.2% to around 3,202 with growth-oriented stocks leading mainland markets higher.
      • Monday’s gains also built on last week’s rally when Chinese authorities vowed to accelerate the rollout of new measures aimed at stabilizing the economy.
    • In Japan, the Nikkei 225 rose 0.59% to 27,924 on the back of a recovery in Wallstreet as well as regional markets trading higher.
      • Also, investors assessed better-than-expected US jobs data, likely to add to the Fed’s aggressive stance against surging inflation.
      • Japanese technology stocks mostly declined, with sharp losses from SoftBank Group (-1.4%),
      • but the upside, local energy stocks tracked oil prices higher, with gains from Inpex Corp (1.6%) and Eneos Holdings (2.7%).
  • Crude oil  futures jumped toward $120/bl  after Saudi Arabia sharply raised prices for its crude sales in July.
    • The move highlighting tight global supplies even after OPEC+ agreed to accelerate its output increases over the next two months.
      • Saudi raised the official selling price for its flagship Arab light crude bound for its main Asian market and to northwest Europe.
      • Last week OPEC+ decided to increase output in July and August by 648,000 barrels per day or 50% more than previously planned.
        • However, markets continued to doubt the group’s ability to meet demand as several member countries struggle to boost output.
    • Also, demand is soaring in the US amid peak driving season and as China eases Covid lockdowns.
    • On the supply side;  watching if the US was considering allowing more sanctioned Iranian and Venezuelan oil onto global markets to make up for Russian crude. Energy News
  • Gold traded above $1,850/ oz after a volatile week in the financial markets.
    •  On Friday the latest US jobs report surprised markets to the upside and raised concerns of further monetary policy tightening.
    • Data showed the US economy posting higher than expected job numbers and reinforcing bets of additional rate hikes going into the second half of the year.
    • In addition, Investors now look ahead to the May CPI for release on Friday, to gauge whether US inflation has peaked.
    • Meanwhile, risks to the global economic outlook and ongoing supply disruptions and high commodity prices offer the bullion some support. Kitco metals
  • The US dollar increased above the 102 level after a better-than-expected US jobs report bolstered the Federal Reserve’s aggressive stance against surging inflation.
    • Data showed the US economy added 390,000 jobs in May, posting higher than expected and reinforcing bets of additional rate hikes going into the second half of the year.
    • The Fed has raised interest rates by an aggregate of 75 basis points this year and is widely expected to increase rates by another 50 bps at each of the next two meetings in June and July.
    • Investors now look ahead to the May consumer price index for release later this week to gauge whether US inflation has peaked.
    • Cleveland Fed Bank President Loretta Mester said Friday she is looking for “compelling” evidence that inflation has peaked before reducing the pace of the Fed’s monetary tightening. FX news
  • Crypto

    • Bitcoin traded to $31,500 on the back of a recovery in risk assets.
      • However, news have emerged the Bitcoin miners have sold approximately $6.3bn worth of coins to raise cash to fund mining operations.
      • The drop in crypto prices across the board have resulted in miners experiencing cashflow problems resulting operational pressures.
      • Surging power prices coupled with slipping crypto prices are putting miners under pressure.
      • Bitcoin is down 54% from its 10 November record highs.
  • Ukraine-Russia

    • Ukraine’s Zelenskyy said on Sunday that he had visited two towns near the front in the Donbas region in eastern Ukraine, where Russian forces are concentrated. He also visited Zaporizhzhia, which is partly under Russian control.
    • In addition, the UK announced it would send long-range missiles to Ukraine despite Putin warning;
    • The WAR has now passed 100 days.
COVID-19 SOURCE Cases / Deaths / Recoveries
  • WORLD 535,506,506 / 6,320,612 / 501,531,774
  • USA 86,522,561 /1,033,591 / 82,584,531
  • SA 3,968,205 / 101,317 / 3,836,337
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