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Morning NOTE

9 June 2022


The ZAR strengthened to 15.1800 on back of bullish sentiment across the entire emerging market FX complex.


  • The Rand gained as Emerging market currencies rallied across the board.
    • Strong gainers were the Mexican Peso, Russian Rouble as well as other high yielding currencies.
    • Investors betting on a slow down in US inflation and a change in the pace of  Fed policy tightening, resulting in a rush for high yielding Risk currencies.
  • The only exception being Dollar-Turkey, where government monetary policy continues to undermine the health of the economy and currency.
    • With inflation at 73.5%, the central bank pledged to cut rates by 500bps.
  • On the data front, we have the ECB rate decision unchanged expected), but more importantly the change in language that could result in a rate hike in July 2022.
    • The Euro hitting new highs VS the Japanese Yen, as the BOJ continues to flood the system with liquidity further eroding the appeal of the YEN.

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
  • 13:45 : ECB RATE DECISION : EXPECTED UNCHANGED ( RATES AT 0% VS INFLATION AT 8.3%) ** expected to announce hikes in July.
  • Today : Expect some large ZAR gains following a strong rally in EMFX across the world.

    • Investors betting inflation have stalled based on growth data and traders rushing to buy high-yielding currencies
    • Focus remains on Friday’s US CPI data, with large directional bets highly unlikely.
  • USDZAR :  Expect a range 15.1500-15.4500
    • Importers 15.2500-15.1500
    • Exporters 15.3500-15.4500
  • EURZAR :  Expect a range of 16.2700-16.5300
    • Importers 16.3400-16.2700
    • Exporters 16.4500-16.5300
  • GBPZAR :  Expect a range of 19.0000-19.2900
    • Importers 19.1100-19.0000
    • Exporters 19.2200-19.2900
  • USDZAR 15.30000
  • EURZAR 16.40000
  • GBPZAR 19.15000


  • Deputy President David Mabuza has also called for cool heads and said that MPs should allow for law enforcement agencies to investigate the robbery at the president’s Limpopo farm without any interference.
    • In addition, the Deputy President David Mabuza said that they hadn’t reached a point to even consider President Cyril Ramaphosa’s resignation because of the criminal allegations he was facing. EWN
  • The Economic Freedom Fighters (EFF) has called on President Cyril Ramaphosa to step aside following allegations that he concealed a crime from the police.
    • EFF leader Julius Malema cast doubt on the ability of local law enforcement institutions to investigate Ramaphosa while he remained in office.
    • Party leader Julius Malema threatened to disrupt Ramaphosa’s tenure if he refused to step aside. News24
  • The brothers Atul and Rajesh Gupta have been arrested in the United Arab Emirates.
    • They are accused in South Africa of profiting from their close links with former president Jacob Zuma and exerting unfair influence.
    • Their arrests follow the issuing of a red notice by International Criminal Police Organisation (Interpol) at the beginning of March 2022.
    • This paved the way for their arrest to face fraud and money laundering charges in South Africa.
    • At the height of their activities in South Africa they owned a business empire spanning computer equipment, media, and mining.  Moneyweb



  • Stocks were down in regular New York trading on Wednesday.
    • The Dow fell 0.81%, the S&P 500 lost 1.08% and the Nasdaq Composite was down 0.73%.
    • The market continues to range trade, as investors look for signs of slowing economic growth ahead of May’s consumer price index reading due out on Friday.
    • The data is expected to come in slightly below April’s numbers and could indicate that inflation has reached its peak.
    • However, a high inflation reading would likely put an end to speculations that the Federal Reserve will pause its interest rate hikes in September.
  • The 10-year yield, consolidated above 3% as investors assessed the outlook for tightening monetary policy ahead of a critical US inflation reading.
    • Inflation in the US is expected to stay above 8% increasing pressure on the Federal Reserve to stick to aggressive rate hikes.
    • The Fed began its tightening cycle in March raising interest rates by an aggregate of 75 basis points. Source :  U.S. Department of the Treasury
  • The Dow declined 269 to 32,910
  • The SP500 declined 44 to 4,115
  • The Nasdaq  declined 88 to 12,086
Futures Trading:
  • image : Trading economics
  • Asian markets trading mixed with the Nikkei higher and China lower.
    • In Japan, the Nikkei 225 traded inched up 0.04% to close at 28,246, erasing much of the gains from earlier in the session, as losses in chip-related and shipping stocks countered gains in energy firms and other index heavyweights.
      • Chip-related firms in Japan declined after Intel warned of slowing demand for semiconductors, meanwhile, energy stocks climbed higher as oil prices jumped overnight.
    • In Australia, the ASX 200 Index dropped 1.42% to 7,020 on Thursday, closing at its lowest level in nearly a month.
      • The move as banking stocks extended their declines after the central bank’s larger-than-expected rate hike triggered concerns of a housing market sell-off.
      • The “Big Four” banks hit multi-month lows, with sharp losses from Commonwealth Bank (-2.1%), Westpac (-3.1%).
  • Crude oil Brent crude futures held above $123 per barrel on Thursday after settling 2.5% higher in the previous session, amid signs of further market tightness in US crude inventories.
    • Crude stocks at the Cushing hub dropped to the lowest since early March, while gasoline inventories are at the lowest seasonal level in eight years.
    • Oil prices have been pushed higher this year as economies recovered from the pandemic, while Russia’s invasion of Ukraine disrupted trade flows and caused further tightening.
    • China’s ongoing reopening after recent lockdowns also added to the buying pressure.
    • Meanwhile, Goldman Sachs said that prices needed to rally further before achieving the demand destruction required for market rebalancing. Energy News
  • Gold flatlined at $1,850/oz, as investors weighed concerns over economic growth against rising Treasury yields ahead of US inflation data that could guide the Federal Reserve’s rate hike timeline.
    • The data will be crucial for the path of Fed policy and whether the central bank will keep raising interest rates beyond July.
    • Meanwhile, risks to the global economic outlook arising from the war in Ukraine, rising borrowing costs, ongoing supply disruptions and high commodity prices continued to offer the bullion some support.
  • The US dollar index rallied to 102.5 on Thursday, remaining in a tight trading range, as investors brace for US inflation data that could guide the Federal Reserve’s rate hike timeline.
    • The US CORE CPI for May due out on Friday is expected to have gained 5.9% on the year, after an annual rise of 6.2% in April, based on consensus forecasts.
    • While markets have priced in another half-percentage point rate increases for both June and July, a high inflation reading would bolster expectations of further tightening in the second half of the year. FX news
  • The Euro & The ECB

    • The Euro traded around $1.0710 as traders brace for this week’s ECB monetary policy decision which is expected to set the tone for a rate hike next month.
      • The central bank will likely announce the conclusion of its large-scale asset purchases and confirm plans to raise interest rates in July.
      • With inflation in the Euro Area shows no signs of slowing, hitting a fresh record high of 8.1% in May.
      • Traders are pricing in 130 bps of ECB rate increases by year-end, including a 30% chance of an additional 25 bps move beyond the fully priced 25 bps in July. Source : Fx Daily
COVID-19 SOURCE Cases / Deaths / Recoveries
  • WORLD 538,215,295 / 6,326,796 / 511,519,228
  • USA 86,988,671 / 1,035,031 / 82,825,999
  • SA  3,973,086 / 101,424 / 3,846,597
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