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Morning NOTE

8 June 2022


The ZAR recovered to reach 15.3300 on the back of stronger than expected SA economic growth data.


  • The Rand recovered from early session lows of 15.5400 to track towards 15.3300 after the release of SA Q1 GDP data.

  • STATS SA confirming the economy grew more than expected with the manufacturing sector exceeding losses experienced in mining.
    • Q1 GDP advanced by 1.9% QoQ, to March of 2022, following an upwardly revised 1.4% rise in the previous period.
    • It was also well above market estimates of a 1.2% rise helped by the easing of all remaining Covid-19 restrictions.
    • The data allowed for YoY growth to reach 3% vs 1.7% in the previous period.
  • The data also supporting last week’s drop in the unemployment rate as the SA economy returns to pre-pandemic levels.
  • Further supporting the ZAR was a drop in US yields (the 10YT below 3%), after major retail store severely under-reported earnings.
    • Target Corp. warned about excess inventory and said it would cut prices, boosting bets that the worst of inflation may be in the past.


  • Wednesday:
    • 11h00  Euro area GDP Q1 ; 5.1 % expected vs 4.7% previous.
  • Thursday:

    • 11h00 : SA Current account Q1 : R105bn expected vs R120bn previous.
    • 11:30 : Gold production April : -15% expected vs -25.6% previous
    • 11:30 : Mining production April : -5% expected vs -9.3% previous
    • 13h00 : Manufacturing production April : -2.6% expected vs -0.8% previous
  • Friday:
    • US CPI at 14h30 with 8.3% expected.
  • Today: Expect some large  ZAR range trading with 15.2800 and 15.5500 expected to hold.
    • Focus remains on Friday’s US CPI data, with large directional bets highly unlikely.
    • SA GDP data fully ZAR supportive, and any news in favour of lower US inflation could see the ZAR target lower 15’s.
    • On the flip side a bearish print and a break of 15.5800 targets 15.7000-15.9900.
  • USDZAR :  Expect a range 15.2800-15.5500
    • Importers 15.3600-15.2800
    • Exporters 15.4500-15.5500
  • EURZAR :  Expect a range of 16.3700-16.6800
    • Importers 16.5300-16.3700
    • Exporters 16.5200-16.6800
  • GBPZAR :  Expect a range of 19.2200-19.5100
    • Importers 19.3200-19.2200
    • Exporters 19.4200-19.5100
  • USDZAR 15.4000
  • EURZAR 16.4700
  • GBPZAR 19.3700


  • Opposition parties continue to pressure both SARS and the SARB on the stolen Rampahosa millions.
    • However, the country’s financial authorities, including SARS, have remained tight-lipped on whether they would investigate millions of US dollars kept on President Cyril Ramaphosa’s farm.
    • Pressure continues to mount on Ramaphosa to come clean about this saga.
    • SA political analysts saying this was severely damaging to the reputation of the sitting president. IOL
      • The EFF made a string of allegations against president Cyril Ramaphosa;
      • Some of it inlcuded accusing him of money laundering and tax evasion because of the large amount of money that had been stored at his Phala Phala farm.
      • Along with the DA , opposition parties wants President Cyril Ramaphosa to answer a list of questions in Parliament regarding money stolen from his farm in February 2020. EWN
  • Following stronger than expected GDP figures, the International Monetary Fund (IMF) said on Tuesday that its staff concluded a visit to SA.
    • The fund said, its staff were increasingly concerned about the country’s economic growth outlook and the implications on employment, poverty and inequality.
    • It said, Africa’s most industrialised economy has recovered from the Covid-19 pandemic faster than many analysts had predicted. Moneyweb
  • More than R35 million which was falsely claimed from the UIF Covid-19 Temporary Employee/Employer Relief Scheme (TERS) is to be reimbursed.
    • This after the CEO of the Eastern Cape Transport Tertiary Co-Operative Limited (ECTTC), Dr Nokuthula Mbebe, made numerous fraudulent applications.
    • The High Court of SA, EC Division, granted the NPA’s Asset Forfeiture Unit (AFU) a forfeiture order against the misappropriated money valued at R35m. CT
  • Crypto scammer and Mirror Trading International (MTI) founder & CEO , Johann Steynberg’s attempted to be released from prison and placed under house arrest.
    • The application was heard while awaiting extradition to South Africa, but was denied by a judge in Brazil this week.
    • It was reported at the time of Steynberg’s arrest in December 2021 that he had a Brazilian girlfriend.
    • However, the judge did not rule out extradition in Steynberg’s case merely because he had a family in that country.
      • MTI was the largest crypto scam in 2020, with investors losing more than R4.7bn. Moneyweb



  • Shares rallied in New York with  the Dow + 0.8%, the S&P 500 + 0.95% and the Nasdaq + 0.94% for their second straight day of gains.
    • Ten of the 11 S&P sectors ended in positive territory, led by the energy, industrials and health sectors.
    • The stock market shrugged off a profit warning from Target after the retailer slashed its guidance and said it was planning to get rid of excess inventory.
    • Today, US equity futures lower on Wednesday after two straight days of gains on Wall Street, as investors continued to assess the impact of surging inflation.
      • Also an economic slowdown and tighter financial conditions on corporate earnings and the wider economy.
  • Investors now look ahead to Friday’s price level readings for May, to see the crucial path of Federal Reserve policy beyond July.
  • The US10-year yield held recovered 3% after falling below, following major announcements by Mega US retailer Target Corp.
    • The company warning investors about excess inventory and said it would cut prices, boosting bets that the worst of inflation may be in the past.
    • However, US CPI remains the focus on Friday and data this week that could strengthen the case for aggressive interest rate hikes by the Fed.
    • Investors all betting for a slowdown in the trajectory of inflation as growth slows. source: U.S. Department of the Treasury
  • The Dow gained 264 to 33,180
  • The SP500 added 39  to 4,160
  • The Nasdaq  added 113 to 12,175
Futures Trading:
  • image : Trading economics
  • Asian markets higher, following the overnight rally on Wallstreet.
    • In Hong Kong the Hang Seng rallied 1.5% and in Japan the Nikkei advanced for the 4th straight session.
      • The Nikkei 225 rose 0.8% to 28,160, hitting fresh two-month highs and taking cues from a higher overnight session on Wall Street.
        • A weaker ¥en and an unwavering commitment to monetary easing also helped local equities.
        • BOJ Governor Kuroda insisting a weak Yen will benefit pandemic-hit service providers, as Japan is set to reopen its doors to foreign tourists from Friday.
        • Moreover, investors assessed data which showed Japan’s economy contracted less than initially estimated in the first quarter of this year.
    • In Australia, the ASX200 rallied 0.8% to around 7,150 on Wednesday, recouping some losses from the previous session.
      • Wednesday’s gains also followed a sharp decline on Tuesday when the RBA delivered a larger-than-expected 50 basis point rate hike to 0.85%.
      • The hike seen as a shock and awe move meant to get ahead of inflation.
      • Leading the rebound were tech stocks and energy shares continued to outperform on the back of  firm oil prices, with gains from Woodside Energy (1.6%).
  • Crude oil spiked again!

    • Brent futures trading at $121/bl, supported by tight global supplies and the prospect of higher demand from China after relaxation of Covid curbs and the summer driving season in the US.
    • Markets are also gearing up for the release of official US crude inventories, which is expected to show another drawdown last week.
      • The theme remains tight supply as Asia’s refining margins for diesel hit a fresh record on Tuesday.
      • The CEO of global commodities trader Trafigura warned that the oil market could see prices surging to record highs and triggering a slowdown in economic growth.
      • He added that energy markets were in a “critical” state ,citing Russia and by years of under-investment. Source : Energy News
  • Gold retreated to $1850/oz, as the dollar and US yields regained upward momentum.
    • Still, investors looking ahead to US inflation data to guide the outlook for interest rates.
    • The US CPI for May due out on Friday is expected to have gained 8.3% YOY on the year, after an annual rise of 8.3% in April, based on consensus forecasts.
    • The data will be crucial for the path of Federal Reserve policy and whether the central bank will keep raising interest rates beyond July.
    • Meanwhile, geopolitical risks continued to attract flows into the yellow metal as well as inflation. Source : Kitco Metals
  • The US Dollar firmed up around 102.5 after struggling to hold onto levels reached in the previous session.
    • Traders firmly braced for US inflation data later this week that could strengthen the case for aggressive interest rate hikes by the Federal Reserve.
    • Across the pond, investors cautious ahead of the European Central Bank meeting on where it is expected to at least lay the groundwork for rapid rate rises.
      • Investors also aware of a better-than-expected US jobs report from last week, which signalled economic resiliency and supported the Fed’s stance against inflation.
      • While markets priced in another 50 basis point rate hikes both in June and July.
      • NB: A high inflation reading would bolster expectations of further tightening in the second half of the year.
  • Ukraine-Russia

    • Radiation detectors in the Exclusion Zone around Ukraine’s defunct Chornobyl nuclear power plant are back online.
      • It was back in operation for the first time since Russia seized the area on Feb. 24, and radiation levels are normal, the U.N. nuclear watchdog said. Reuters
    • U.S. starts training Ukrainian troops to use rocket systems
      • The U.S. military has begun training Ukrainian forces on the sophisticated rocket systems that the Biden administration agreed last week to provide.
      • However, Russia has said could trigger wider airstrikes in Ukraine. CNBC
    • Fiji’s top court allowed the U.S. to take possession of a $235 million, 350-foot yacht said to be owned by Russian billionaire Suleiman Kerimov.
      • The superyacht Amadea quickly was sailed out of a port in Fiji, bound for the United States, the Department of Justice said.
      • The seizure is the latest in a series of actions taken against the assets of Russia’s elite as punishment for their country’s invasion of Ukraine. CNN
      • Globally asset grabs continues with the proceeds of the sales going towards the Ukrainian WAR effort.
COVID-19 SOURCE https://www.worldometers.info/coronavirus/ Cases / Deaths / Recoveries
  • WORLD 536,613,318 / 6,323,467 / 507,760,825
  • USA 86,782,404 / 1,034,284 / 82,754,408
  • SA 3,970,993 / 101,397 / 3,844,040
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