The ZAR continued to register gains against the Dollar as more benign US PPI indicated that inflation might have peaked.
Significant data this week;
- UK GDP GROWTH RATE : Came out lower than expected at -0.1% QoQ vs +2.8% expected
- Next week
- 14h30 : US HOUSING STARTS ( NEW HOME SALES) JULY WITH +1.55M EXPECTED
- 15H15 : US INDUSTRIAL PRODUCTION 4% EXPECTED VS +4.2% PREVIOUS
- 08h00 : UK INFLATION +9.4% PREVIOUS , NO CONSENSUS ON EXPECTATION.
- 13H00 SA RETAIL SALES FOR JUN + 0.1% EXPECTED VS 1% PREVIOUS ( ***key for the health of the US economy and Fed policy).
- 20h00 : US FOMC MINUTES FROM PREVIOUS FED MEETING
- Expect some Dollar support and profit taking on long Rand positions. The jump in US yields like to support the Greenback.
- Importers are encouraged to take advantage of current levels and cover commitments.
- The likelihood of a break through 16.000 highly unlikely after the strong ZAR run.
- The market will require new NEWS/ECO data to support such views.
- Therefore expect consolidation and a move back towards 16.4000 not unlikely in the next 1 – 2 sessions.
- USDZAR : Expect a range 16.1300-16.3500
- Importers 16.2000-16.1300
- Exporters 16.2700-16.3500
- EURZAR : Expect a range of 16.6400-16.8500
- Importers 16.7100-16.6400
- Exporters 16.7900-16.8500
- GBPZAR : Expect a range of 19.6400-16.9100
- Importers 19.7300-19.6400
- Exporters 19.8300-19.9100
- USDZAR 16.2200
- EURZAR 16.7400
- GBPZAR 19.7700
- More Strikes? Unions are planning to challenge the government’s “unfair” wage increases.
- This after Eskom employees secured a 7% pay increase but the rest of the state payroll only received a 3% boost.
- The South African Parastatal and Tertiary Institutes Union (SAPTU), says it is prepared to challenge government over unfair salary increases for its members.
- According to a statement released by the union on Friday, employees last received increases in 2019 and it was only an inflation adjustment. Moneyweb
- Developers Fundamentum Property Group and JSE-listed Tongaat Hulett finally broke ground on Westown.
- The development a new mixed-use mini city west of Durban in KwaZulu-Natal (KZN), almost four years after they announced plans for the initial development.
- The multi-billion-rand development planned for land will be anchored by Westown Square – a “high street” shopping centre expected to have a R1.3 billion price tag. moneytweb
- News reports indicated that Minister of Police Bheki Cele and his office spent more than R2.8 billion on hotel accommodation, entertainment and catering since he took office in May 2019 until June this year.
- During the same period, Cele, his deputy Cassel Mathale, and officials in the ministry accounted for more than R800 million of the expenditure.
- The other amount spent was police officials who reported directly to the National Commissioner of Police Sehlahle Fannie Masemola. IOL
- The Western Cape is seeking to welcome cold weather with snow predicated.
- The province remains worried about a low rainfall this winter as dams remain below “sustainable” water levels.
- The South African Weather Service has issued a weather advisory.
- “The public and small stock farmers should be advised that loss of vulnerable livestock and crops can be expected due to the combination of very cold, windy and wet conditions.
- It further cautioned anyone intending on going out to sea to practise extreme caution. EWN
- In regular trading in New York, the Dow inched up 0.08%, while the S&P 500 and Nasdaq Composite reversed early gains to close 0.07% and 0.58% lower, respectively.
- Six of the 11 S&P sectors declined, with healthcare and consumer discretionary stocks leading the losses.
- In addition, energy shares outperformed after higher oil and Natural gas prices.
- Traders also booked profits and reassessed the outlook for US inflation and interest rates.
- Futures contracts tied to the three major indexes were all near breakeven.
- The 10-year US yield spiked to a 3-week high of 2.9% with focus instead on more rate hikes by the Federal Reserve.
- Fed funds futures traders are now pricing in a 58% chance of a 50-basis-point hike in September and a 42% chance of a 75-basis-point increase.
- Data showed US producer prices declined in July for the first time in over two years, while analysts expected them to increase, suggesting that producer inflation could be on a downward trend.
- On top of that, consumer prices in the US rose 8.5% annually in July, lower than expectations of 8.7%, while the core inflation rate unexpectedly stagnated.
- The Dow gained 27 points to 33,336
- The SP500 declined 2.97 to 4,207
- The Nasdaq fell 74.89 to 12,779
- image : Trading economics