Trade report 24/03/2014
ZAR outlook
USD/ZAR expected range: 10.7300 – 10.8800
The ZAR has started the week in steady trade against the USD, but with concerns over a slowdown in growth in China the currency is looking vulnerable. The performance of the Rand last week is important to note as it was the worst week for the ZAR since January. The ZAR was trading at R10.8890/USD at 08:19 this morning, slightly improved from its close in New York on Friday of R10.9100/USD.
Local news
The main forecasted news on the local front for the week is the SARB’s announcement of its policy decision. Despite the banks reluctance to increase interest rates due to consumer debt it will need to come across in a hawkish light, to prevent further lack of interest in the ZAR by foreign investors. Economists are leaning towards the opinion that we may see another small interest rate hike, maybe even a smaller 25bp margin which would help maintain the SARB’s credibility going forward.
International news
Poor preliminary HSBC manufacturing PMI out of China has caused many emerging market currency's reliant on the economic giant for trade, to soften as the PMI data for March fell to an eight month low. The hawkish approach by the US Fed in its latest policy meeting has also had EMs on the backfoot. PMI Data released earlier today has shown that growth in Germany, the Eurozones largest economy, has improved at its slowest rate in 4 months. This has caused the EUR to soften vs the GBP.
TODAYS KEY DATA POINTS (GMT):
• 01:45 CN HSBC manufacturing PMI (preliminary)
• 08:30 DE Markit/BME manufacturing PMI (preliminary)
• 09:00 EZ Markit composite PMI (preliminary)
• 09:00 EZ Markit/BME manufacturing PMI (preliminary)
• 09:00 EZ Markit services PMI (preliminary)
• 12:30 US Chicago Fed activity index
• 13:45 US Markit manufacturing PMI (preliminary)
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Monday, 24 March 2014
Thursday, 20 March 2014
Fed comments have ZAR on backfoot
Trade report 20/03/2014
ZAR outlook
USD/ZAR expected range: 10.8000 – 10.9500
Hawkish comments by Federal Reserve Head Janet Yellen saw the ZAR and most emerging markets soften overnight. This could be compounded if US jobless claims come in better than anticipated today. The Rand was trading at R10.8695/USD this morning at 06:51 GMT, significantly weaker than its R10.6810 high on Wednesday before the Fed announcement.
Local news
Consumer inflation increased to 5.9% y/y as expected from the previous 5.8% y/y. Core inflation remained unchanged at 5.3% y/y. Retail sales data surprised to the topside and came in at 6.8% y/y from the previous reading of 2.7% y/y, much improved from the expected 2.9% y/y. This could influence the SARBs interest rate decision at its policy meeting next week.
International news
Comments by Janet Yellen that the US may increase interest rates as soon as 6 months after tapering ends put pressure on emerging market currencies as the USD strengthened. In other news the EUR-GBP exchange rate fell to its lowest level in a week as unemployment data out the Netherlands and inflation data from Germany came out weaker than expected, raising concerns that the Eurozone economic growth is still struggling.
TODAYS KEY DATA POINTS (GMT):
• 07:00 DE Producer prices y/y
• 07:15 JP BoJ’s Kuroda speak
• 12:30 US Initial jobless claims
• 14:00 US Existing home sales
• 14:00 US Leading indicators
• 14:00 US Philadelphia Fed index
• 20:00 US Fed releases Dodd-Frank Act stress test results
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ZAR outlook
USD/ZAR expected range: 10.8000 – 10.9500
Hawkish comments by Federal Reserve Head Janet Yellen saw the ZAR and most emerging markets soften overnight. This could be compounded if US jobless claims come in better than anticipated today. The Rand was trading at R10.8695/USD this morning at 06:51 GMT, significantly weaker than its R10.6810 high on Wednesday before the Fed announcement.
Local news
Consumer inflation increased to 5.9% y/y as expected from the previous 5.8% y/y. Core inflation remained unchanged at 5.3% y/y. Retail sales data surprised to the topside and came in at 6.8% y/y from the previous reading of 2.7% y/y, much improved from the expected 2.9% y/y. This could influence the SARBs interest rate decision at its policy meeting next week.
International news
Comments by Janet Yellen that the US may increase interest rates as soon as 6 months after tapering ends put pressure on emerging market currencies as the USD strengthened. In other news the EUR-GBP exchange rate fell to its lowest level in a week as unemployment data out the Netherlands and inflation data from Germany came out weaker than expected, raising concerns that the Eurozone economic growth is still struggling.
TODAYS KEY DATA POINTS (GMT):
• 07:00 DE Producer prices y/y
• 07:15 JP BoJ’s Kuroda speak
• 12:30 US Initial jobless claims
• 14:00 US Existing home sales
• 14:00 US Leading indicators
• 14:00 US Philadelphia Fed index
• 20:00 US Fed releases Dodd-Frank Act stress test results
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Wednesday, 19 March 2014
Rand steady ahead of FOMC announcement
Trade report 21/03/2014
ZAR outlook
USD/ZAR expected range: 10.6700 – 10.8300
Investors have been waiting for the announcement of the FOMC decision and the release of local data before taking strong positions, which has allowed the Rand to hold steady in trading today so far. The ZAR was little changed this morning from its overnight close in New York of R10.7395/USD as was trading at R10.7455/USD at 06:33GMT this morning.
Local news
Today sees the release of much anticipated inflation data as it may give economists clues as to the SARB’s interest rate decision at its policy meeting next week. A Reuters poll expects inflation to have increased mainly due to the weaker Rand pushing up the CPI index. Retail sales data is also due for release today and the market expects this figure to have dropped as consumers battle increased prices and higher debt levels.
International news
The Fed is due to announce its taper decision today, although the expected $10bil taper will unlikely have much effect in the markets, having already mostly been priced in. After weeks of controversy, the signing of a treaty by President Putin making Crimea part of Russia has eased the tensions in the Ukraine area which helped emerging market currencies strengthen yesterday.
TODAYS KEY DATA POINTS (GMT):
• 08:00 SA CPI y/y
• 11:00 SA Retail sales constant
• 09:30 GB ILO unemployment rate (3 mths)
• 10:00 EZ Construction output wda y/y
• 12:30 US Current account balance
• 18:00 US Fed QE pace
• 18:00 US FOMC rate decision
• 18:30 US Fed Chair Yellen holds press conference
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ZAR outlook
USD/ZAR expected range: 10.6700 – 10.8300
Investors have been waiting for the announcement of the FOMC decision and the release of local data before taking strong positions, which has allowed the Rand to hold steady in trading today so far. The ZAR was little changed this morning from its overnight close in New York of R10.7395/USD as was trading at R10.7455/USD at 06:33GMT this morning.
Local news
Today sees the release of much anticipated inflation data as it may give economists clues as to the SARB’s interest rate decision at its policy meeting next week. A Reuters poll expects inflation to have increased mainly due to the weaker Rand pushing up the CPI index. Retail sales data is also due for release today and the market expects this figure to have dropped as consumers battle increased prices and higher debt levels.
International news
The Fed is due to announce its taper decision today, although the expected $10bil taper will unlikely have much effect in the markets, having already mostly been priced in. After weeks of controversy, the signing of a treaty by President Putin making Crimea part of Russia has eased the tensions in the Ukraine area which helped emerging market currencies strengthen yesterday.
TODAYS KEY DATA POINTS (GMT):
• 08:00 SA CPI y/y
• 11:00 SA Retail sales constant
• 09:30 GB ILO unemployment rate (3 mths)
• 10:00 EZ Construction output wda y/y
• 12:30 US Current account balance
• 18:00 US Fed QE pace
• 18:00 US FOMC rate decision
• 18:30 US Fed Chair Yellen holds press conference
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Tuesday, 18 March 2014
Rand range-bound after yesterdays dip
Trade report 18/03/2014
ZAR outlook
USD/ZAR expected range: 10.7000 – 10.8400
The ZAR dipped slightly yesterday morning as the market looked forward to a week full of international and local data. Its trade was mostly range bound for the rest of the day yesterday, and has been most of the morning today, trading around the R10.7380/USD level.
Local news
The Rand seems to be holding well at the moment especially considering the on-going platinum strike which is now into its eighth week, the first of the Eskom electricity blackouts last week as well as the political tension in the Ukraine. Investors will be hoping for positive inflation data for February and retail sales data from January, both due for release this week, to keep the Rand supported.
International news
There is a string of US data due for release this week, but the main risk to emerging markets will be the release of the FOMC decision tomorrow and any increased tension in the Ukraine. Meanwhile the EUR remains firmer against the GBP today despite poor investor confidence out of Germany, the Eurozones largest economy.
TODAYS KEY DATA POINTS (GMT):
• 09:30 SA Non-farm payrolls y/y
• 10:00 DE ZEW economic sentiment
• 10:00 EZ ZEW economic sentiment
• 11:00 RU Russian president Putin speaks
• 12:30 US Housing Starts
• 12:30 US Building permits
• 12:30 US CPI y/y
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ZAR outlook
USD/ZAR expected range: 10.7000 – 10.8400
The ZAR dipped slightly yesterday morning as the market looked forward to a week full of international and local data. Its trade was mostly range bound for the rest of the day yesterday, and has been most of the morning today, trading around the R10.7380/USD level.
Local news
The Rand seems to be holding well at the moment especially considering the on-going platinum strike which is now into its eighth week, the first of the Eskom electricity blackouts last week as well as the political tension in the Ukraine. Investors will be hoping for positive inflation data for February and retail sales data from January, both due for release this week, to keep the Rand supported.
International news
There is a string of US data due for release this week, but the main risk to emerging markets will be the release of the FOMC decision tomorrow and any increased tension in the Ukraine. Meanwhile the EUR remains firmer against the GBP today despite poor investor confidence out of Germany, the Eurozones largest economy.
TODAYS KEY DATA POINTS (GMT):
• 09:30 SA Non-farm payrolls y/y
• 10:00 DE ZEW economic sentiment
• 10:00 EZ ZEW economic sentiment
• 11:00 RU Russian president Putin speaks
• 12:30 US Housing Starts
• 12:30 US Building permits
• 12:30 US CPI y/y
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Monday, 17 March 2014
Rand dips ahead of data filled week
Trade report 17/03/2014
ZAR outlook
USD/ZAR expected range: 10.6100 – 10.7500
The ZAR finished off last week as one of the top EM performers with dollar weakness against the EUR helping the local currency. Another factor that helped the Rand was the smaller than anticipated current account balance as a percentage of GDP, although at more than 5% there is still much room for improvement. Despite last week’s performance the Rand dropped 0.2% this morning to R10.6900/USD by 06:30GMT, from its close in New York of R10.6900/USD on Friday evening.
Local news
Economists expect international sentiment to drive the markets this week, although there is also much data due for release locally. Feb CPI numbers and Jan retail sales data are due out on Wednesday with a slight increase expected for inflation, and a slowdown in retail sales. Meanwhile the platinum sector strike is entering its eighth week and while it has little impact on day-to-day trading, will more than likely affect growth data further down the line.
International news
Investors will be closely watching political tensions in Ukraine and Russia this week and the outcome of Sundays Crimea referendum and potential economic sanctions from the EU/US against Russia. Also in the news will be the FOMC decision after close of SA trade on Wednesday, with investors expecting another taper of $10bn, which will increase pressure on the ZAR and other emerging market currencies.
TODAYS KEY DATA POINTS (GMT):
• 10:00 EZ CPI y/y (final)
• 12:30 US Empire manufacturing
• 13:00 US Net long term TIC flows
• 13:15 US Industrial production m/m
• 13:15 US Manufacturing production m/m
• 14:00 US NAHB Housing market index
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ZAR outlook
USD/ZAR expected range: 10.6100 – 10.7500
The ZAR finished off last week as one of the top EM performers with dollar weakness against the EUR helping the local currency. Another factor that helped the Rand was the smaller than anticipated current account balance as a percentage of GDP, although at more than 5% there is still much room for improvement. Despite last week’s performance the Rand dropped 0.2% this morning to R10.6900/USD by 06:30GMT, from its close in New York of R10.6900/USD on Friday evening.
Local news
Economists expect international sentiment to drive the markets this week, although there is also much data due for release locally. Feb CPI numbers and Jan retail sales data are due out on Wednesday with a slight increase expected for inflation, and a slowdown in retail sales. Meanwhile the platinum sector strike is entering its eighth week and while it has little impact on day-to-day trading, will more than likely affect growth data further down the line.
International news
Investors will be closely watching political tensions in Ukraine and Russia this week and the outcome of Sundays Crimea referendum and potential economic sanctions from the EU/US against Russia. Also in the news will be the FOMC decision after close of SA trade on Wednesday, with investors expecting another taper of $10bn, which will increase pressure on the ZAR and other emerging market currencies.
TODAYS KEY DATA POINTS (GMT):
• 10:00 EZ CPI y/y (final)
• 12:30 US Empire manufacturing
• 13:00 US Net long term TIC flows
• 13:15 US Industrial production m/m
• 13:15 US Manufacturing production m/m
• 14:00 US NAHB Housing market index
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Friday, 14 March 2014
EMs range bound after volatile week
Trade report 14/03/2014
ZAR outlook
USD/ZAR expected range: 10.7400 – 10.8900
Better than expected local manufacturing data and a stronger EUR helped the Rand strengthen yesterday afternoon, but the currency slipped again this morning as investors show concerns over growth in China, the world’s second largest economy. The ZAR was trading at R10.8280/USD at 06:51GMT this morning, down 0.2% from its close of R10.8050 in New York yesterday evening.
Local news
Manufacturing data came in better than expected yesterday, although economists warn that growth of 2.5% still needs much improvement, especially with China experiencing a growth slowdown. Mining data disappointed yesterday which was to be expected. Production dropped from 12.2% y/y to 3.1% y/y and with on-going strike action these figures will most probably be affected through Q1 as well. SARB governor Marcus made comments last night that suggest that the markets expectations of big interest rate hikes are overdone, which may keep pressure on the local currency.
International news
Emerging market currencies have been feeling the pressure this week of investors nervous about the economic slowdown in China and the escalating uncertainty in the Ukraine area. This has caused much volatility in the markets, although EM currencies are presently mostly range-bound and waiting for further direction from international events and data releases, as dealers generally feel the selling was overdone.
TODAYS KEY DATA POINTS (GMT):
• 09:30 SA ILB auction
• 07:00 DE CPI y/y (final)
• 09:30 GB Visible trade balance (GBP)
• 12:30 US PPI final demand y/y
• 13:55 US Michigan consumer confidence (preliminary)
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ZAR outlook
USD/ZAR expected range: 10.7400 – 10.8900
Better than expected local manufacturing data and a stronger EUR helped the Rand strengthen yesterday afternoon, but the currency slipped again this morning as investors show concerns over growth in China, the world’s second largest economy. The ZAR was trading at R10.8280/USD at 06:51GMT this morning, down 0.2% from its close of R10.8050 in New York yesterday evening.
Local news
Manufacturing data came in better than expected yesterday, although economists warn that growth of 2.5% still needs much improvement, especially with China experiencing a growth slowdown. Mining data disappointed yesterday which was to be expected. Production dropped from 12.2% y/y to 3.1% y/y and with on-going strike action these figures will most probably be affected through Q1 as well. SARB governor Marcus made comments last night that suggest that the markets expectations of big interest rate hikes are overdone, which may keep pressure on the local currency.
International news
Emerging market currencies have been feeling the pressure this week of investors nervous about the economic slowdown in China and the escalating uncertainty in the Ukraine area. This has caused much volatility in the markets, although EM currencies are presently mostly range-bound and waiting for further direction from international events and data releases, as dealers generally feel the selling was overdone.
TODAYS KEY DATA POINTS (GMT):
• 09:30 SA ILB auction
• 07:00 DE CPI y/y (final)
• 09:30 GB Visible trade balance (GBP)
• 12:30 US PPI final demand y/y
• 13:55 US Michigan consumer confidence (preliminary)
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Thursday, 13 March 2014
ZAR recovers after shaky start to the week
Trade report 13/03/2014
ZAR outlook
USD/ZAR expected range: 10.7000 – 10.8500
The ZAR has been under pressure most of the week so far and even fell to a two week low as concerns over growth in China and tensions in the Ukraine unnerved investors. Today the ZAR has managed to recover slightly and is holding steady ahead of local and US data releases as investor sentiment has improved. The Rand was trading at R10.7850 /USD at 06:34GMT this morning, slightly firmer than its close in New York yesterday of R10.8005/USD.
Local news
The local current account deficit has narrowed from 6.4% in Q3 to 5.1% in Q4 which exceeded expectations by 0.4%, although it must be noted that a deficit of more than 5% to GDP is still considered pronounced and there was thus little reaction in the markets. Today sees the release of mining and manufacturing production data. The mining data may be a risk to the currency as recent strike action will most likely have a negative effect on the results.
International news
Despite recent concern over tension in the Ukraine, global sentiment to emerging markets assets has dramatically improved with strong rises in the Asian markets, and Turkey making solid gains despite fresh protest action in the area. Meanwhile the AUD has strengthened against the EUR after Australia posted impressive employment data, the biggest increase in over 12 years.
TODAYS KEY DATA POINTS (GMT):
• 07:00 SA SARB Deputy Gov. Mminele speaks
• 09:30 SA Mining production y/y
• 11:00 SA Manufacturing production n.s.a y/y
• 16:30 SA SARB Gov. Marcus speaks
• 12:30 US Advance retail sales
• 12:30 US Initial jobless claims
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ZAR outlook
USD/ZAR expected range: 10.7000 – 10.8500
The ZAR has been under pressure most of the week so far and even fell to a two week low as concerns over growth in China and tensions in the Ukraine unnerved investors. Today the ZAR has managed to recover slightly and is holding steady ahead of local and US data releases as investor sentiment has improved. The Rand was trading at R10.7850 /USD at 06:34GMT this morning, slightly firmer than its close in New York yesterday of R10.8005/USD.
Local news
The local current account deficit has narrowed from 6.4% in Q3 to 5.1% in Q4 which exceeded expectations by 0.4%, although it must be noted that a deficit of more than 5% to GDP is still considered pronounced and there was thus little reaction in the markets. Today sees the release of mining and manufacturing production data. The mining data may be a risk to the currency as recent strike action will most likely have a negative effect on the results.
International news
Despite recent concern over tension in the Ukraine, global sentiment to emerging markets assets has dramatically improved with strong rises in the Asian markets, and Turkey making solid gains despite fresh protest action in the area. Meanwhile the AUD has strengthened against the EUR after Australia posted impressive employment data, the biggest increase in over 12 years.
TODAYS KEY DATA POINTS (GMT):
• 07:00 SA SARB Deputy Gov. Mminele speaks
• 09:30 SA Mining production y/y
• 11:00 SA Manufacturing production n.s.a y/y
• 16:30 SA SARB Gov. Marcus speaks
• 12:30 US Advance retail sales
• 12:30 US Initial jobless claims
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Monday, 10 March 2014
ZAR starts the week on the backfoot
Trade report 10/03/2014
ZAR outlook
USD/ZAR expected range: 10.7000 – 10.8500
The ZAR enjoyed a few days of firm gains last week, but softened on better than expected USD non-farm payrolls data. It remains under pressure today as data out of China is disappointing, and so starts a data-heavy week on the backfoot. The currency was trading at R10.7700/USD at 06:35GMT this morning, down 0.4% from its close in New York on Friday evening.
Local news
There are significant local risks to the Rand this week as there is much data due for release. Current account data for the 4th quarter is scheduled for release on Wednesday, and this will give the complete picture as to economic growth for 2013. Following that is the release of mining and manufacturing data on Thursday with Reserve Bank Governor Gill Marcus due to speak on Thursday evening.
International news
The USD strengthened on Friday after non-farm payrolls data came in better than expected. Today’s news from China that growth in the world’s second largest economy has slowed and is now reporting a trade balance deficit, has put pressure back on emerging economies. Reports that tensions have flared up near the Ukraine have added to this pressure and created renewed volatility in the markets.
TODAYS KEY DATA POINTS (GMT):
• O/N JP Trade balance (JPY)
• O/N JP GDP annualised (final)
• 09:30 EZ Sentfix investor confidence index
• 10:15 US Fed’s Plosser speaks
• 16:40 US Fed’s Evans speaks
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ZAR outlook
USD/ZAR expected range: 10.7000 – 10.8500
The ZAR enjoyed a few days of firm gains last week, but softened on better than expected USD non-farm payrolls data. It remains under pressure today as data out of China is disappointing, and so starts a data-heavy week on the backfoot. The currency was trading at R10.7700/USD at 06:35GMT this morning, down 0.4% from its close in New York on Friday evening.
Local news
There are significant local risks to the Rand this week as there is much data due for release. Current account data for the 4th quarter is scheduled for release on Wednesday, and this will give the complete picture as to economic growth for 2013. Following that is the release of mining and manufacturing data on Thursday with Reserve Bank Governor Gill Marcus due to speak on Thursday evening.
International news
The USD strengthened on Friday after non-farm payrolls data came in better than expected. Today’s news from China that growth in the world’s second largest economy has slowed and is now reporting a trade balance deficit, has put pressure back on emerging economies. Reports that tensions have flared up near the Ukraine have added to this pressure and created renewed volatility in the markets.
TODAYS KEY DATA POINTS (GMT):
• O/N JP Trade balance (JPY)
• O/N JP GDP annualised (final)
• 09:30 EZ Sentfix investor confidence index
• 10:15 US Fed’s Plosser speaks
• 16:40 US Fed’s Evans speaks
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Friday, 7 March 2014
Rand holding onto gains ahead of US jobs data
Trade report 07/03/2014
ZAR outlook
USD/ZAR expected range: 10.5400 – 10.7100
An upbeat EUR helped the ZAR strengthen yesterday and even reach 2 month highs of R10.5930/USD. The Rand was trading at R10.6180/USD at 06:45GMT this morning, only slightly weaker than its close in New York yesterday and holding steady before the release of the US payrolls data, thought to be the main driver in the markets today.
Local news
The Rand managed to shrug off the first of the load-shedding by Eskom yesterday, as it took direction from a firmer EUR. It remains to be seen whether this can be maintained though as these blackouts, previously only targeted at industrial users, will put pressure on an already fragile growth environment.
International news
News that the ECB has left interest rates unchanged, as Pres Draghi said that issues that had the Bank concerned last month were now mostly resolved, helped the EUR post gains against the USD. This in turn helped most EMs firm up against the USD. Today sees the release of the key US payrolls data which investors will be keenly awaiting, although Fed member Lockhart has stated that even a slightly disappointing reading will unlikely change the course of tapering.
TODAYS KEY DATA POINTS (GMT):
• 06:00 SA Net reserves (USD)
• 09:30 SA ILB auction (R800mn)
• 11:00 DE Industrial production wda y/y
• 13:30 US Trade balance (USD)
• 13:30 US Change in nonfarm payrolls
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ZAR outlook
USD/ZAR expected range: 10.5400 – 10.7100
An upbeat EUR helped the ZAR strengthen yesterday and even reach 2 month highs of R10.5930/USD. The Rand was trading at R10.6180/USD at 06:45GMT this morning, only slightly weaker than its close in New York yesterday and holding steady before the release of the US payrolls data, thought to be the main driver in the markets today.
Local news
The Rand managed to shrug off the first of the load-shedding by Eskom yesterday, as it took direction from a firmer EUR. It remains to be seen whether this can be maintained though as these blackouts, previously only targeted at industrial users, will put pressure on an already fragile growth environment.
International news
News that the ECB has left interest rates unchanged, as Pres Draghi said that issues that had the Bank concerned last month were now mostly resolved, helped the EUR post gains against the USD. This in turn helped most EMs firm up against the USD. Today sees the release of the key US payrolls data which investors will be keenly awaiting, although Fed member Lockhart has stated that even a slightly disappointing reading will unlikely change the course of tapering.
TODAYS KEY DATA POINTS (GMT):
• 06:00 SA Net reserves (USD)
• 09:30 SA ILB auction (R800mn)
• 11:00 DE Industrial production wda y/y
• 13:30 US Trade balance (USD)
• 13:30 US Change in nonfarm payrolls
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Wednesday, 5 March 2014
Rand steady after volatile start to the week
Trade report 05/03/2014
ZAR outlook
USD/ZAR expected range: 10.7100 – 10.8500
As the tension between Russia and the Ukraine appears to have eased for the moment, so has investor aversion to risky assets, which allowed the ZAR and most emerging markets to strengthen yesterday. The Rand was trading at R10.7750/USD at 06:49GMT, only 0.1% softer than its close in New York yesterday, and has remained more or less steady so far today.
Local news
The ZAR is currently steady after a volatile start to the week for the markets. The Association of Mineworkers and Construction Union has revised its wage demands in the hope of bringing the almost 6 week long strike to an end. It is now asking for staggered pay increases compared to the original demand of immediate pay increases. The end to the strike would definitely be a positive for the local currency as it has put extra pressure on economic growth.
International news
Comments from President Putin that he would only use force in the Ukraine as a last resort have eased the tensions in the area and in turn helped calm the volatile markets. There is still much data due for release this week and the key US jobs data and ECB meeting may create a demand for the USD and in turn put pressure on the emerging market currencies.
TODAYS KEY DATA POINTS (GMT):
• 07:15 SA HSBC/Markit PMI
• 09:00 EZ PMI Composite (final)
• 10:00 EZ GDP sa q/q (second reading)
• 13:15 US ADP employment change
• 15:00 US ISM non-manufacturing PMI
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ZAR outlook
USD/ZAR expected range: 10.7100 – 10.8500
As the tension between Russia and the Ukraine appears to have eased for the moment, so has investor aversion to risky assets, which allowed the ZAR and most emerging markets to strengthen yesterday. The Rand was trading at R10.7750/USD at 06:49GMT, only 0.1% softer than its close in New York yesterday, and has remained more or less steady so far today.
Local news
The ZAR is currently steady after a volatile start to the week for the markets. The Association of Mineworkers and Construction Union has revised its wage demands in the hope of bringing the almost 6 week long strike to an end. It is now asking for staggered pay increases compared to the original demand of immediate pay increases. The end to the strike would definitely be a positive for the local currency as it has put extra pressure on economic growth.
International news
Comments from President Putin that he would only use force in the Ukraine as a last resort have eased the tensions in the area and in turn helped calm the volatile markets. There is still much data due for release this week and the key US jobs data and ECB meeting may create a demand for the USD and in turn put pressure on the emerging market currencies.
TODAYS KEY DATA POINTS (GMT):
• 07:15 SA HSBC/Markit PMI
• 09:00 EZ PMI Composite (final)
• 10:00 EZ GDP sa q/q (second reading)
• 13:15 US ADP employment change
• 15:00 US ISM non-manufacturing PMI
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Tuesday, 4 March 2014
ZAR firms on hopes of Ukraine peace
Trade report 04/03/2014
ZAR outlook
USD/ZAR expected range: 10.7300 – 10.8800
The Rand dipped yesterday after tensions in the Ukraine caused a bout of panic in the markets. But the local currency has regained some of its losses today as Russia orders troops to return to base, raising the hopes of peace in the area. The ZAR was trading at R10.8300/USD at 07.10GMT this morning, slightly stronger than its close in New York yesterday of R10.9090.
Local news
Yesterday’s Kagiso PMI reading was stronger than expected at 51.7. Despite this, the reading is not reflecting a growth rate strong enough to warrant much attention or help make any significant gains for the ZAR, especially as international sentiment seems to be driving the market at the moment with little local data due for release today.
International news
President Putin has ordered troops that were busy with military exercises in central and western Russia, to return to base. This pulling out of troops has been interpreted as a move towards peace which is risk positive for investors, and as such good news for emerging markets and the local currency. Today also sees the release of US PMI data and the Feds Lacker will speak on the economy, which may give clues as to future taper decisions.
TODAYS KEY DATA POINTS (GMT):
• 09:30 SA Bond auction
• 09:30 GB PMI construction
• 14:45 US ISM New York PMI
• 15:00 US IBD/TIPP economic optimism
• 21:15 US Fed’s Lacker speaks on economy
• US President Obama sends 2015 fiscal budget to Congress
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ZAR outlook
USD/ZAR expected range: 10.7300 – 10.8800
The Rand dipped yesterday after tensions in the Ukraine caused a bout of panic in the markets. But the local currency has regained some of its losses today as Russia orders troops to return to base, raising the hopes of peace in the area. The ZAR was trading at R10.8300/USD at 07.10GMT this morning, slightly stronger than its close in New York yesterday of R10.9090.
Local news
Yesterday’s Kagiso PMI reading was stronger than expected at 51.7. Despite this, the reading is not reflecting a growth rate strong enough to warrant much attention or help make any significant gains for the ZAR, especially as international sentiment seems to be driving the market at the moment with little local data due for release today.
International news
President Putin has ordered troops that were busy with military exercises in central and western Russia, to return to base. This pulling out of troops has been interpreted as a move towards peace which is risk positive for investors, and as such good news for emerging markets and the local currency. Today also sees the release of US PMI data and the Feds Lacker will speak on the economy, which may give clues as to future taper decisions.
TODAYS KEY DATA POINTS (GMT):
• 09:30 SA Bond auction
• 09:30 GB PMI construction
• 14:45 US ISM New York PMI
• 15:00 US IBD/TIPP economic optimism
• 21:15 US Fed’s Lacker speaks on economy
• US President Obama sends 2015 fiscal budget to Congress
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Monday, 3 March 2014
Ukraine crisis keeps pressure on emerging markets
Trade report 03/03/2014
ZAR outlook
USD/ZAR expected range: 10.7300 – 10.8800
The Rand enjoyed a mostly stable week last week and will be looking to hold onto those gains going forward, although increased tension in the Ukraine will weigh on investor sentiment. The ZAR was trading at R10.81/USD at 06:15GMT this morning, just half a percent off its close in New York on Friday evening of R10.7575/USD.
Local news
A softer USD and upbeat sentiment over last week’s budget speech has allowed the ZAR to strengthen to levels around R10.70/USD, the strongest levels since mid-January. What is concerning is recent trade figures released on Friday that show that the trade deficit has increased to R17.06bn from R2.78bn in December. Today sees the release of SA vehicle sales data which may give clues as to the state of consumer spending in the country.
International news
Tensions in the Ukraine intensified over the week-end. The threat of war in the area will keep the pressure on the Rand and all emerging market currencies as investors steer clear of risky assets. The week ahead sees the release of key US payrolls data and PMI data which may bring some volatility to the markets.
TODAYS KEY DATA POINTS (GMT):
• 09:00 SA Kagiso PMI
• SA Naamsa vehicle sales y/y
• 09:00 EZ PMI manufacturing (final)
• 09:30 GB PMI manufacturing
• 13:58 US Markit PMI manufacturing (final)
• 15:00 US ISM manufacturing PMI
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ZAR outlook
USD/ZAR expected range: 10.7300 – 10.8800
The Rand enjoyed a mostly stable week last week and will be looking to hold onto those gains going forward, although increased tension in the Ukraine will weigh on investor sentiment. The ZAR was trading at R10.81/USD at 06:15GMT this morning, just half a percent off its close in New York on Friday evening of R10.7575/USD.
Local news
A softer USD and upbeat sentiment over last week’s budget speech has allowed the ZAR to strengthen to levels around R10.70/USD, the strongest levels since mid-January. What is concerning is recent trade figures released on Friday that show that the trade deficit has increased to R17.06bn from R2.78bn in December. Today sees the release of SA vehicle sales data which may give clues as to the state of consumer spending in the country.
International news
Tensions in the Ukraine intensified over the week-end. The threat of war in the area will keep the pressure on the Rand and all emerging market currencies as investors steer clear of risky assets. The week ahead sees the release of key US payrolls data and PMI data which may bring some volatility to the markets.
TODAYS KEY DATA POINTS (GMT):
• 09:00 SA Kagiso PMI
• SA Naamsa vehicle sales y/y
• 09:00 EZ PMI manufacturing (final)
• 09:30 GB PMI manufacturing
• 13:58 US Markit PMI manufacturing (final)
• 15:00 US ISM manufacturing PMI
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Friday, 28 February 2014
Upbeat ZAR ahead of the week-end
Trade report 28/02/2014
ZAR outlook
USD/ZAR expected range: 10.7500 – 10.9000
The ZAR strengthened yesterday as the budget speech was more heavily absorbed by economists and described as “mainly credit positive”. The ZAR was trading at R10.7250/USD at 06:29GMT this morning, down 0.3% from yesterdays close in New York. The local currency may dip today should trade data disappoint, but losses should not be significant.
Local news
Ratings agencies have commented on the budget speech by Gordhan Pravin this week, and the general feeling is a positive one which has helped the ZAR firm up this week along with a generally weaker USD. Fitch noted that the government is trying to stabilise debt ratios, while supporting the economy, but that the targets identified will be challenging. Moodys comments were more upbeat and it seems the threat of another ratings downgrade have been minimised for the moment.
International news
Data due out today looks set to help the ZAR maintain its recent gains unless there are surprises out of the US releases. The Euro has strengthened against its major peers with upbeat news over inflation, which coupled with the good unemployment data released this week, has helped the EUR reach its best level versus the USD so far this year.
TODAYS KEY DATA POINTS (GMT):
• 06:00 SA M3 money supply y/y
• 06:00 SA Private sector credit y/y
• 12:00 SA Government budget balance (ZAR)
• 12:00 SA Trade balance
• 10:00 EZ CPI estimates y/y
• 13:30 US GDP q/q annualized (second reading)
• 14:45 US Chicago PMI
• 14:55 US Michigan consumer confidence
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ZAR outlook
USD/ZAR expected range: 10.7500 – 10.9000
The ZAR strengthened yesterday as the budget speech was more heavily absorbed by economists and described as “mainly credit positive”. The ZAR was trading at R10.7250/USD at 06:29GMT this morning, down 0.3% from yesterdays close in New York. The local currency may dip today should trade data disappoint, but losses should not be significant.
Local news
Ratings agencies have commented on the budget speech by Gordhan Pravin this week, and the general feeling is a positive one which has helped the ZAR firm up this week along with a generally weaker USD. Fitch noted that the government is trying to stabilise debt ratios, while supporting the economy, but that the targets identified will be challenging. Moodys comments were more upbeat and it seems the threat of another ratings downgrade have been minimised for the moment.
International news
Data due out today looks set to help the ZAR maintain its recent gains unless there are surprises out of the US releases. The Euro has strengthened against its major peers with upbeat news over inflation, which coupled with the good unemployment data released this week, has helped the EUR reach its best level versus the USD so far this year.
TODAYS KEY DATA POINTS (GMT):
• 06:00 SA M3 money supply y/y
• 06:00 SA Private sector credit y/y
• 12:00 SA Government budget balance (ZAR)
• 12:00 SA Trade balance
• 10:00 EZ CPI estimates y/y
• 13:30 US GDP q/q annualized (second reading)
• 14:45 US Chicago PMI
• 14:55 US Michigan consumer confidence
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Thursday, 27 February 2014
Rand dips as emerging markets feel renewed pressure
Trade report 27/02/2014
ZAR outlook
USD/ZAR expected range: 10.7500 – 10.9000
The ZAR has been trading steadily this week and managed to firm up nicely, but slipped yesterday after Gordhan Pravin’s budget speech and renewed international pressure on emerging market currencies. The ZAR dropped 0.8% yesterday and was trading at R10.8150/USD at 15:35GMT yesterday afternoon.
Local news
Focus yesterday was mainly on the budget speech which was encouraging in the fact that despite forecasted economic growth being trimmed to 2.7%, the forecasted budget deficit has been revised lower for the entire FY13-15 period and the govt. has managed to avoid higher income taxes which is the best news taxpayers could hope for. The lower growth prediction was expected according to economists so the main reason for the ZAR’s slip yesterday was more due to international sentiment.
International news
EM currencies felt the pressure yesterday after the news that Russian armed forces were put on alert by President Putin, and although Russia stated that the action was “unrelated to events in the Ukraine", it has raised tensions in the area. Despite this the EUR has managed to strengthen against the GBP after positive unemployment data was released earlier out of Germany.
TODAYS KEY DATA POINTS (GMT):
• 09:30 SA PPI y/y
• 08:55 DE Unemployment rate sa
• 13:00 DE CPI y/y (preliminary)
• 13:00 EZ ECB’s Weidmann speaks
• 13:30 US Durable goods orders m/m
• 13:30 US Initial jobless claims
• 15:00 US Fed Chair Yellen testifies to the Senate
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ZAR outlook
USD/ZAR expected range: 10.7500 – 10.9000
The ZAR has been trading steadily this week and managed to firm up nicely, but slipped yesterday after Gordhan Pravin’s budget speech and renewed international pressure on emerging market currencies. The ZAR dropped 0.8% yesterday and was trading at R10.8150/USD at 15:35GMT yesterday afternoon.
Local news
Focus yesterday was mainly on the budget speech which was encouraging in the fact that despite forecasted economic growth being trimmed to 2.7%, the forecasted budget deficit has been revised lower for the entire FY13-15 period and the govt. has managed to avoid higher income taxes which is the best news taxpayers could hope for. The lower growth prediction was expected according to economists so the main reason for the ZAR’s slip yesterday was more due to international sentiment.
International news
EM currencies felt the pressure yesterday after the news that Russian armed forces were put on alert by President Putin, and although Russia stated that the action was “unrelated to events in the Ukraine", it has raised tensions in the area. Despite this the EUR has managed to strengthen against the GBP after positive unemployment data was released earlier out of Germany.
TODAYS KEY DATA POINTS (GMT):
• 09:30 SA PPI y/y
• 08:55 DE Unemployment rate sa
• 13:00 DE CPI y/y (preliminary)
• 13:00 EZ ECB’s Weidmann speaks
• 13:30 US Durable goods orders m/m
• 13:30 US Initial jobless claims
• 15:00 US Fed Chair Yellen testifies to the Senate
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Tuesday, 25 February 2014
Rand firm ahead of budget speech
Trade report 25/02/2014
ZAR outlook
USD/ZAR expected range: 10.7500 – 10.9000
The Rand surprised yesterday and firmed to its strongest position in over a week despite negative data released out of China. The ZAR was trading at R10.8270 at 06:45GMT, 0.3% off its close in New York last night of R10.7940/USD.
Local news
Today sees the release of local GDP news which investors are hoping will help the ZAR hold onto its recent gains against the USD. This comes ahead of the budget speech by Pravin Gordhan tomorrow where the Finance Minister is expected to maintain a firm grip on public spending in order to encourage stronger economic growth in the longer term.
International news
A drop in property prices and reduced bank lending in China has emphasised the slowdown in the Chinese economy, which will keep the pressure on many EM currencies, heavily reliant on trade with the economic giant. Meanwhile the GBP has strengthened after data released reveals that the number of new mortgages approved has risen to the highest number in 6 years, adding to the theory that the UK economy is recovering steadily.
TODAYS KEY DATA POINTS (GMT):
• 07:00 SA Leading Indicator
• 09:30 SA Bond auction (R2030 – R1bn; R2037 – 800mn; R2048 – 550mn)
• 09:30 SA GDP y/y nsa
• 07:00 DE GDP y/y nsa (final)
• 14:00 US House price index m/m
• 14:00 US S&P/Case house price composite – 20y/y
• 15:00 US Consumer confidence
• 15:00 US Richmond Fed manufacturing index
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ZAR outlook
USD/ZAR expected range: 10.7500 – 10.9000
The Rand surprised yesterday and firmed to its strongest position in over a week despite negative data released out of China. The ZAR was trading at R10.8270 at 06:45GMT, 0.3% off its close in New York last night of R10.7940/USD.
Local news
Today sees the release of local GDP news which investors are hoping will help the ZAR hold onto its recent gains against the USD. This comes ahead of the budget speech by Pravin Gordhan tomorrow where the Finance Minister is expected to maintain a firm grip on public spending in order to encourage stronger economic growth in the longer term.
International news
A drop in property prices and reduced bank lending in China has emphasised the slowdown in the Chinese economy, which will keep the pressure on many EM currencies, heavily reliant on trade with the economic giant. Meanwhile the GBP has strengthened after data released reveals that the number of new mortgages approved has risen to the highest number in 6 years, adding to the theory that the UK economy is recovering steadily.
TODAYS KEY DATA POINTS (GMT):
• 07:00 SA Leading Indicator
• 09:30 SA Bond auction (R2030 – R1bn; R2037 – 800mn; R2048 – 550mn)
• 09:30 SA GDP y/y nsa
• 07:00 DE GDP y/y nsa (final)
• 14:00 US House price index m/m
• 14:00 US S&P/Case house price composite – 20y/y
• 15:00 US Consumer confidence
• 15:00 US Richmond Fed manufacturing index
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Monday, 24 February 2014
ZAR holding onto gains
Trade report 24/02/2014
ZAR outlook
USD/ZAR expected range: 10.9000 – 11.0300
The Rand managed to firm up towards the end of last week and has been managing to hold relatively steady after the USD took a knock due to the release of a string of softer than anticipated US data. The ZAR was trading at R10.9425/USD at 08:42am, very close to its close in New York on Friday evening of R10.9350/USD.
Local news
The local currency has benefited recently off the weaker USD and the ease on global risk aversion. With some key local data due out this week, it could be an important week for the ZAR, with investors hoping the currency can continue to make gains. Q4 GDP, January money supply and PCSE trade figures are all due out this week as well as the budget speech on Wednesday, which is an important day for the bond market.
International news
Industrial production data, housing starts and permits and existing home sales data released last week were all softer than expected causing to USD to weaken against most of its peers and giving emerging market currencies a reprieve. The resolution to the Ukraine political crisis where parliament removed the president over the week-end, has also helped EMs stabilise after a volatile few days last week.
TODAYS KEY DATA POINTS (GMT):
• 01:30 CN China property prices
• 09:00 DE IFO business climate
• 10:00 EZ CPI y/y (final)
• 13:30 US Chicago Fed activity index
• 15:30 US Dallas Fed manufacturing activity
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ZAR outlook
USD/ZAR expected range: 10.9000 – 11.0300
The Rand managed to firm up towards the end of last week and has been managing to hold relatively steady after the USD took a knock due to the release of a string of softer than anticipated US data. The ZAR was trading at R10.9425/USD at 08:42am, very close to its close in New York on Friday evening of R10.9350/USD.
Local news
The local currency has benefited recently off the weaker USD and the ease on global risk aversion. With some key local data due out this week, it could be an important week for the ZAR, with investors hoping the currency can continue to make gains. Q4 GDP, January money supply and PCSE trade figures are all due out this week as well as the budget speech on Wednesday, which is an important day for the bond market.
International news
Industrial production data, housing starts and permits and existing home sales data released last week were all softer than expected causing to USD to weaken against most of its peers and giving emerging market currencies a reprieve. The resolution to the Ukraine political crisis where parliament removed the president over the week-end, has also helped EMs stabilise after a volatile few days last week.
TODAYS KEY DATA POINTS (GMT):
• 01:30 CN China property prices
• 09:00 DE IFO business climate
• 10:00 EZ CPI y/y (final)
• 13:30 US Chicago Fed activity index
• 15:30 US Dallas Fed manufacturing activity
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Thursday, 20 February 2014
Rand loses ground
Trade report 20/02/2014
ZAR outlook
USD/ZAR expected range: 11.0100 – 11.1600
The Rand slipped below the key R11.00/USD level late yesterday afternoon as emerging market sentiment took a turn for the worse. The ZAR was trading at R11.0625/USD at 06:07GMT, down almost 0.2% from its close in New York yesterday evening and the first time this week it has ended a session below 11.
Local news
Local data revealed yesterday that consumer inflation has risen from 5.4% in December to a higher than anticipated 5.8% in January. The ZAR initially strengthened on this news but this did not last long as investors started selling off emerging market assets. Ongoing strikes also keep the pressure on the Rand as they have now cost the economy an estimated R4.4bn in revenue.
International news
Two main factors have caused the recent sell off in emerging market assets. First being the poor data out of China. HSBC Chinese manufacturing data has fallen to a 7 month low in Feb of 48.3 as employment fell at its fastest pace in 5 years. Secondly speakers from the Fed yesterday re-iterated the positive outlook on the US growth economy and the FOMC minutes released pointed to the continuing of the Fed taper in a predictable steady manner.
TODAYS KEY DATA POINTS (GMT):
• 07:00 DE Producer prices y/y
• 08:30 DE PMI manufacturing (advance)
• 09:00 EZ PMI manufacturing (advance)
• 13:30 US CPI y/y
• 13:30 US Initial jobless claims
• 13:58 US Markit PMI manufacturing
• 15:00 US Philadelphia Fed index
• 15:00 EZ Consumer Confidence
• 15:00 US Leading Indicators
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ZAR outlook
USD/ZAR expected range: 11.0100 – 11.1600
The Rand slipped below the key R11.00/USD level late yesterday afternoon as emerging market sentiment took a turn for the worse. The ZAR was trading at R11.0625/USD at 06:07GMT, down almost 0.2% from its close in New York yesterday evening and the first time this week it has ended a session below 11.
Local news
Local data revealed yesterday that consumer inflation has risen from 5.4% in December to a higher than anticipated 5.8% in January. The ZAR initially strengthened on this news but this did not last long as investors started selling off emerging market assets. Ongoing strikes also keep the pressure on the Rand as they have now cost the economy an estimated R4.4bn in revenue.
International news
Two main factors have caused the recent sell off in emerging market assets. First being the poor data out of China. HSBC Chinese manufacturing data has fallen to a 7 month low in Feb of 48.3 as employment fell at its fastest pace in 5 years. Secondly speakers from the Fed yesterday re-iterated the positive outlook on the US growth economy and the FOMC minutes released pointed to the continuing of the Fed taper in a predictable steady manner.
TODAYS KEY DATA POINTS (GMT):
• 07:00 DE Producer prices y/y
• 08:30 DE PMI manufacturing (advance)
• 09:00 EZ PMI manufacturing (advance)
• 13:30 US CPI y/y
• 13:30 US Initial jobless claims
• 13:58 US Markit PMI manufacturing
• 15:00 US Philadelphia Fed index
• 15:00 EZ Consumer Confidence
• 15:00 US Leading Indicators
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Tuesday, 18 February 2014
Rand steady after quieter start to the week
Trade report 18/02/2014
ZAR outlook
USD/ZAR expected range: 10.7700 – 10.9200
Yesterday was a quiet day in the markets as the US markets enjoyed a public holiday. This allowed emerging market currencies to consolidate their recent gains due to a broadly weaker USD. The Rand was trading at R10.8625/USD at 06:11GMT this morning, which was 0.4% down from its close of R10.8200/USD in New York yesterday evening.
Local news
Upbeat emerging market sentiment has supported the ZAR over the past few days and helped it break through the psychological R11.00/USD level, but local issues continue to leave the ZAR vulnerable. Ongoing labour unrest which may now result in more job losses continues to damage investor confidence and South Africa’s twin deficits remain uncomfortably high. Investors will be hoping for positive CPI data tomorrow which may help the Rand maintain its recent gains.
International news
Today sees the release of German/EZ ZEW economic sentiment as well as US Empire manufacturing data, but this will unlikely have any significant effect in the markets. Investors will be more eagerly awaiting tomorrows Fed speeches and US data as well as the local CPI release.
TODAYS KEY DATA POINTS (GMT):
• 09:30 SA Bond auction (R2023 – 550mn; R2030 – 1bn; R209 – 800mn)
• 09:00 EZ Current account (seasonally adjusted) (EUR)
• 09:30 GB CPI y/y
• 09:30 GB PPI output core y/y n.s.a
• 10:00 DE ZEW economic sentiment
• 13:30 US Empire manufacturing
• 15:00 US NAHB Housing market index
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ZAR outlook
USD/ZAR expected range: 10.7700 – 10.9200
Yesterday was a quiet day in the markets as the US markets enjoyed a public holiday. This allowed emerging market currencies to consolidate their recent gains due to a broadly weaker USD. The Rand was trading at R10.8625/USD at 06:11GMT this morning, which was 0.4% down from its close of R10.8200/USD in New York yesterday evening.
Local news
Upbeat emerging market sentiment has supported the ZAR over the past few days and helped it break through the psychological R11.00/USD level, but local issues continue to leave the ZAR vulnerable. Ongoing labour unrest which may now result in more job losses continues to damage investor confidence and South Africa’s twin deficits remain uncomfortably high. Investors will be hoping for positive CPI data tomorrow which may help the Rand maintain its recent gains.
International news
Today sees the release of German/EZ ZEW economic sentiment as well as US Empire manufacturing data, but this will unlikely have any significant effect in the markets. Investors will be more eagerly awaiting tomorrows Fed speeches and US data as well as the local CPI release.
TODAYS KEY DATA POINTS (GMT):
• 09:30 SA Bond auction (R2023 – 550mn; R2030 – 1bn; R209 – 800mn)
• 09:00 EZ Current account (seasonally adjusted) (EUR)
• 09:30 GB CPI y/y
• 09:30 GB PPI output core y/y n.s.a
• 10:00 DE ZEW economic sentiment
• 13:30 US Empire manufacturing
• 15:00 US NAHB Housing market index
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Monday, 17 February 2014
ZAR enjoys multi-week highs
Trade report 17/02/2014
ZAR outlook
USD/ZAR expected range: 10.8100 – 11.9400
The ZAR has managed to firm up nicely over the last few sessions as the USD experiences a period of broad weakness. The main reasons for this are firstly signs of an improving UK economy and secondly recent softer data out of the US which has been interpreted as an indication that the Fed may slow its pace of QE tapering. The Rand was trading at R10.8580/USD at 06:54GMT this morning, very close to its close in New York on Friday and the second consecutive session where it managed to close below R11.00/USD.
Local news
The strengthening Rand is mainly due to international market sentiment rather than local at the moment and SA CPI data due out this week will unlikely have much of an impact. Meanwhile the current account deficit remains large as the recent rate hike was too modest to make much of a dent, but the SARB is very weary of debt-ridden consumers and needing to maintain a decent level of economic growth.
International news
Chinese sentiment has improved over the last week with upbeat data released indicating that January saw the highest volume of loans of any month over the last four years, which would suggest that the economy may not be slowing down as much as has been feared. This is good news for emerging market currencies and with it being a quieter day as the US markets celebrate Presidents Day Holiday, they should be able to consolidate their recent gains.
TODAYS KEY DATA POINTS (GMT):
• US Market holiday – Presidents Day
• O/N JP GDP q/q annualized (preliminary)
• 00:01 GB Rightmove house prices y/y
• 04:30 JP Industrial production y/y (final)
• 11:00 US ECB’s Nowotny speaks
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ZAR outlook
USD/ZAR expected range: 10.8100 – 11.9400
The ZAR has managed to firm up nicely over the last few sessions as the USD experiences a period of broad weakness. The main reasons for this are firstly signs of an improving UK economy and secondly recent softer data out of the US which has been interpreted as an indication that the Fed may slow its pace of QE tapering. The Rand was trading at R10.8580/USD at 06:54GMT this morning, very close to its close in New York on Friday and the second consecutive session where it managed to close below R11.00/USD.
Local news
The strengthening Rand is mainly due to international market sentiment rather than local at the moment and SA CPI data due out this week will unlikely have much of an impact. Meanwhile the current account deficit remains large as the recent rate hike was too modest to make much of a dent, but the SARB is very weary of debt-ridden consumers and needing to maintain a decent level of economic growth.
International news
Chinese sentiment has improved over the last week with upbeat data released indicating that January saw the highest volume of loans of any month over the last four years, which would suggest that the economy may not be slowing down as much as has been feared. This is good news for emerging market currencies and with it being a quieter day as the US markets celebrate Presidents Day Holiday, they should be able to consolidate their recent gains.
TODAYS KEY DATA POINTS (GMT):
• US Market holiday – Presidents Day
• O/N JP GDP q/q annualized (preliminary)
• 00:01 GB Rightmove house prices y/y
• 04:30 JP Industrial production y/y (final)
• 11:00 US ECB’s Nowotny speaks
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Friday, 14 February 2014
Rand steady on quieter day in the markets
Trade report 14/02/2014
ZAR outlook
USD/ZAR expected range: 10.9300 – 11.0800
Dollar weakness, not helped by soft US data released yesterday, has helped the ZAR stay steady this week, despite ongoing strike action and South Africa's wide fiscal and current account deficits. The Rand was trading at 11.0200/USD at 07:12GMT, 0.46% weaker than its close in New York on Thursday evening.
Local news
President Zuma delivered a very average “State of the Nation” speech yesterday thought to be full of empty promises and as such failed to make any impact on the markets. Meanwhile the countries wide current account and budget account deficits continue to weigh heavily on the local currency discouraging investors along with ongoing strike action and violent protests.
International news
The USD has been trading softer against its major peers, which has definitely helped emerging market currencies this week. With little key data due for release today it is thought today will be a quieter day in the markets and the ZAR will likely track fellow EM currency the Turkish Lira which posted a sizeable $65bn C/A deficit yesterday.
TODAYS KEY DATA POINTS (GMT):
• 09:30 SA ILB auction (R800mn)
• 07:00 DE GDP WDA y/y (preliminary)
• 10:00 EZ Trade balance (EUR) sa
• 10:00 EZ GDP sa q/q (advance)
• 13:30 US Import price index y/y
• 14:15 US Industrial production m/m
• 14:55 US Michigan consumer confidence (preliminary)
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ZAR outlook
USD/ZAR expected range: 10.9300 – 11.0800
Dollar weakness, not helped by soft US data released yesterday, has helped the ZAR stay steady this week, despite ongoing strike action and South Africa's wide fiscal and current account deficits. The Rand was trading at 11.0200/USD at 07:12GMT, 0.46% weaker than its close in New York on Thursday evening.
Local news
President Zuma delivered a very average “State of the Nation” speech yesterday thought to be full of empty promises and as such failed to make any impact on the markets. Meanwhile the countries wide current account and budget account deficits continue to weigh heavily on the local currency discouraging investors along with ongoing strike action and violent protests.
International news
The USD has been trading softer against its major peers, which has definitely helped emerging market currencies this week. With little key data due for release today it is thought today will be a quieter day in the markets and the ZAR will likely track fellow EM currency the Turkish Lira which posted a sizeable $65bn C/A deficit yesterday.
TODAYS KEY DATA POINTS (GMT):
• 09:30 SA ILB auction (R800mn)
• 07:00 DE GDP WDA y/y (preliminary)
• 10:00 EZ Trade balance (EUR) sa
• 10:00 EZ GDP sa q/q (advance)
• 13:30 US Import price index y/y
• 14:15 US Industrial production m/m
• 14:55 US Michigan consumer confidence (preliminary)
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Thursday, 13 February 2014
ZAR softer despite improved retail sales data
Trade report 13/02/2014
ZAR outlook
USD/ZAR expected range: 10.9900 – 11.1400
The ZAR has been holding relatively steady against the USD over the last day, but has failed to maintain its level below R11.00/USD. It reached a high of R10.9300/USD but never managed to hold onto the gains despite better than anticipated retail sales data being released. The currency was at R11.0495/USD at 08:16 this morning, 0.4% off its close in New York on Wednesday evening.
Local news
Yesterday’s retail sales data came in better than expected at 3.5% y/y after economists expected growth of 2.7%y/y. Despite this the ZAR failed to hold onto its recent gains and broke above the key R11.00/USD level. The currency is struggling against negative investor sentiment with ongoing strikes and protests in townships, and yesterday’s tension between the ANC and the Democratic Alliance only managed to highlight this. The spotlight today will be on President Jacob Zuma’s state of the Nation address, his last before the elections in May.
International news
Today sees the release of US retail sales and jobs data which investors will be paying close attention to, knowing that the Fed will be basing further taper decisions on this, and coming data releases. Meanwhile disappointing data out of the EZ, including record high unemployment levels in Greece, has caused the EUR to lose its recent gains against the GBP.
TODAYS KEY DATA POINTS (GMT):
• 09:30 SA Mining production y/y
• 17:00 SA President Zuma delivers State of the Nation address
• 07:00 DE CPI y/y (final)
• 09:00 EZ ECB releases monthly report
• 13:30 US Advance Retail sales m/m
• 13:30 US Initial jobless claims
• 15:00 US Business inventories m/m
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ZAR outlook
USD/ZAR expected range: 10.9900 – 11.1400
The ZAR has been holding relatively steady against the USD over the last day, but has failed to maintain its level below R11.00/USD. It reached a high of R10.9300/USD but never managed to hold onto the gains despite better than anticipated retail sales data being released. The currency was at R11.0495/USD at 08:16 this morning, 0.4% off its close in New York on Wednesday evening.
Local news
Yesterday’s retail sales data came in better than expected at 3.5% y/y after economists expected growth of 2.7%y/y. Despite this the ZAR failed to hold onto its recent gains and broke above the key R11.00/USD level. The currency is struggling against negative investor sentiment with ongoing strikes and protests in townships, and yesterday’s tension between the ANC and the Democratic Alliance only managed to highlight this. The spotlight today will be on President Jacob Zuma’s state of the Nation address, his last before the elections in May.
International news
Today sees the release of US retail sales and jobs data which investors will be paying close attention to, knowing that the Fed will be basing further taper decisions on this, and coming data releases. Meanwhile disappointing data out of the EZ, including record high unemployment levels in Greece, has caused the EUR to lose its recent gains against the GBP.
TODAYS KEY DATA POINTS (GMT):
• 09:30 SA Mining production y/y
• 17:00 SA President Zuma delivers State of the Nation address
• 07:00 DE CPI y/y (final)
• 09:00 EZ ECB releases monthly report
• 13:30 US Advance Retail sales m/m
• 13:30 US Initial jobless claims
• 15:00 US Business inventories m/m
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Wednesday, 12 February 2014
Chinese sentiment helps Rand remain steady
Trade report 12/02/2014
ZAR outlook
USD/ZAR expected range: 10.9000 – 11.0500
The ZAR has managed to hold onto its recent against against the USD and even remain below the key R11.00/USD level, after trade data out of China and encouraging local data was released. The Rand was trading at R10.9650/USD at 06:51GMT, very close to its close in New York on Tuesday evening. It was the best performing EM currency yesterday at +1.6% vs. the USD.
Local news
Local data released yesterday revealed that the unemployment rate has slowed to 24.1% in Q4 from 24.5% and that manufacturing growth has improved to 2.5% y/y. While these figures are hardly reason to celebrate, the figures are encouraging and along with the trade surplus out of China, have allowed the Rand to hold steady below the R11.00/USD level for the moment.
International news
Chinese trade data has come in firmly on the topside with both import and export growth which has helped the ZAR firm up as well as most emerging markets. Janet Yellens testimony came across in a dovish tone yesterday as she noted that the recovery in the US jobs market is “far from complete”. She did however hint that the Fed taper is likely to continue to taper. Despite this EM markets generally performed well with most ending stronger on the day.
TODAYS KEY DATA POINTS (GMT):
• 11:00 SA Retail sales constant y/y
• 10:00 EZ Industrial production wda y/y
• 10:30 GB BoE releases Inflation Report
• 11:15 EZ ECB’s Praet speaks
• 12:00 US MBA mortgage applications
• 13:45 US Fed’s Bullard speaks
• 15:30 EZ ECB Pres. Draghi speaks
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ZAR outlook
USD/ZAR expected range: 10.9000 – 11.0500
The ZAR has managed to hold onto its recent against against the USD and even remain below the key R11.00/USD level, after trade data out of China and encouraging local data was released. The Rand was trading at R10.9650/USD at 06:51GMT, very close to its close in New York on Tuesday evening. It was the best performing EM currency yesterday at +1.6% vs. the USD.
Local news
Local data released yesterday revealed that the unemployment rate has slowed to 24.1% in Q4 from 24.5% and that manufacturing growth has improved to 2.5% y/y. While these figures are hardly reason to celebrate, the figures are encouraging and along with the trade surplus out of China, have allowed the Rand to hold steady below the R11.00/USD level for the moment.
International news
Chinese trade data has come in firmly on the topside with both import and export growth which has helped the ZAR firm up as well as most emerging markets. Janet Yellens testimony came across in a dovish tone yesterday as she noted that the recovery in the US jobs market is “far from complete”. She did however hint that the Fed taper is likely to continue to taper. Despite this EM markets generally performed well with most ending stronger on the day.
TODAYS KEY DATA POINTS (GMT):
• 11:00 SA Retail sales constant y/y
• 10:00 EZ Industrial production wda y/y
• 10:30 GB BoE releases Inflation Report
• 11:15 EZ ECB’s Praet speaks
• 12:00 US MBA mortgage applications
• 13:45 US Fed’s Bullard speaks
• 15:30 EZ ECB Pres. Draghi speaks
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Tuesday, 11 February 2014
ZAR holding steady ahead of new Fed Chair speech
Trade report 11/02/2014
ZAR outlook
USD/ZAR expected range: 11.0500 – 11.2100
The Rand has remained under pressure over the past few days as ongoing strikes have not yet been resolved by the mediating parties, although a weaker USD ahead of the new US Federal Reserve chairperson Janet Yellen’s speech to Congress, is helping the Rand stay more or less steady. This morning the Rand was trading at R11.1245 at 06:45GMT, slightly firmer than its close in New York on Monday.
Local news
Strike action in the platinum sector is now into its third week which is keeping a negative spotlight on the South African economy, and in turn putting pressure on the local currency which was the second worst performer of the EM currencies yesterday. The markets will be keenly awaiting unemployment and manufacturing data due for release today, as this may offer insight into whether the Reserve Bank may increase interest rates again this year, after its surprise rate hike last month.
International news
The USD is trading slightly weaker today ahead of Janet Yellens speech to Congress which is expected to be dovish in its nature. In other news HSBC released its EM composite PMI yesterday which noted the slowdown below the neutral 50.0 mark by China. Investors are nervous of a further slowdown by the Chinese economy during the year and the markets will therefore be paying close attention to the Chinese trade data, due for release soon, which may put further pressure on EM’s should it be disappointing.
TODAYS KEY DATA POINTS (GMT):
• 09:30 SA Bond auction (R2030 – 1bn; R2037 – 800mn; R2048 – 550mn)
• 09:30 SA Unemployment rate
• 11:00 SA Manufacturing production n.s.a. y/y
• JP Market holiday – National Founding Day
• 15:00 US Fed Chairman Yellen testifies before the House
• 15:00 US Wholesale inventories m/m
• 15:00 US Wholesale sales m/m
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ZAR outlook
USD/ZAR expected range: 11.0500 – 11.2100
The Rand has remained under pressure over the past few days as ongoing strikes have not yet been resolved by the mediating parties, although a weaker USD ahead of the new US Federal Reserve chairperson Janet Yellen’s speech to Congress, is helping the Rand stay more or less steady. This morning the Rand was trading at R11.1245 at 06:45GMT, slightly firmer than its close in New York on Monday.
Local news
Strike action in the platinum sector is now into its third week which is keeping a negative spotlight on the South African economy, and in turn putting pressure on the local currency which was the second worst performer of the EM currencies yesterday. The markets will be keenly awaiting unemployment and manufacturing data due for release today, as this may offer insight into whether the Reserve Bank may increase interest rates again this year, after its surprise rate hike last month.
International news
The USD is trading slightly weaker today ahead of Janet Yellens speech to Congress which is expected to be dovish in its nature. In other news HSBC released its EM composite PMI yesterday which noted the slowdown below the neutral 50.0 mark by China. Investors are nervous of a further slowdown by the Chinese economy during the year and the markets will therefore be paying close attention to the Chinese trade data, due for release soon, which may put further pressure on EM’s should it be disappointing.
TODAYS KEY DATA POINTS (GMT):
• 09:30 SA Bond auction (R2030 – 1bn; R2037 – 800mn; R2048 – 550mn)
• 09:30 SA Unemployment rate
• 11:00 SA Manufacturing production n.s.a. y/y
• JP Market holiday – National Founding Day
• 15:00 US Fed Chairman Yellen testifies before the House
• 15:00 US Wholesale inventories m/m
• 15:00 US Wholesale sales m/m
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Friday, 7 February 2014
ZAR holding onto gains ahead of US data releases
Trade report 07/02/2014
ZAR outlook
USD/ZAR expected range: 11.0500 – 11.2100
The ZAR managed to gain over 1% yesterday, even breaking the R11.00/USD level briefly, as the currency tracked other emerging markets that were benefitting off a weaker USD. The rand was at R11.0350/USD at 06:16GMT very close to its overnight close in New York.
Local news
News of ongoing strike action and other domestic issues seems to have been put to one side as the local currency managed to rally against the USD yesterday moving in line with other emerging market currencies. Movement of the Rand in general at the moment seems dependent on international data. With some key data due out today it will be interesting to note if the Rand can hold onto its recent gains.
International news
The USD has been under pressure this week and investors will be watching closely for news on key nonfarm-payrolls and unemployment data which is due for release later today. General expectation in the markets is one of a significant improvement which will most likely help the USD strengthen but in turn will see the ZAR and other EMs lose some of their gains they have made during the week.
TODAYS KEY DATA POINTS (GMT):
• 06:00 SA Net reserves
• 09:30 SA ILB auction (R800mn)
• 07:00 DE Trade balance (EUR)
• 09:30 GB Visible trade balance (GBP)
• 09:30 GB Industrial production y/y
• 11:00 DE Industrial production wda y/y
• 13:30 US Change in nonfarm payrolls
• 13:30 US Unemployment rate
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ZAR outlook
USD/ZAR expected range: 11.0500 – 11.2100
The ZAR managed to gain over 1% yesterday, even breaking the R11.00/USD level briefly, as the currency tracked other emerging markets that were benefitting off a weaker USD. The rand was at R11.0350/USD at 06:16GMT very close to its overnight close in New York.
Local news
News of ongoing strike action and other domestic issues seems to have been put to one side as the local currency managed to rally against the USD yesterday moving in line with other emerging market currencies. Movement of the Rand in general at the moment seems dependent on international data. With some key data due out today it will be interesting to note if the Rand can hold onto its recent gains.
International news
The USD has been under pressure this week and investors will be watching closely for news on key nonfarm-payrolls and unemployment data which is due for release later today. General expectation in the markets is one of a significant improvement which will most likely help the USD strengthen but in turn will see the ZAR and other EMs lose some of their gains they have made during the week.
TODAYS KEY DATA POINTS (GMT):
• 06:00 SA Net reserves
• 09:30 SA ILB auction (R800mn)
• 07:00 DE Trade balance (EUR)
• 09:30 GB Visible trade balance (GBP)
• 09:30 GB Industrial production y/y
• 11:00 DE Industrial production wda y/y
• 13:30 US Change in nonfarm payrolls
• 13:30 US Unemployment rate
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Thursday, 6 February 2014
ZAR holding onto limited gains
Trade report 06/02/2014
ZAR outlook
USD/ZAR expected range: 11.0500 – 11.2100
There was little action in the markets yesterday for EM currencies and they seem to be going through a period of consolidation as investor sentiment picks up again slowly. The Rand has managed to move away from its 5 year low of last week but has failed to break through the R11.06/07/USD level. This morning at 06:47GMT the local currency was sitting at R11.0950/USD slightly improved from its overnight close in New York.
Local news
Negative investor sentiment, in part due to the ongoing strike by the Association of Mineworkers and Construction Union is thought to be holding the ZAR back and keeping it from breaking through the key R11.06/07 level. The CCMA has now stepped in to try and help the parties reach a settlement but each day lost puts added strain on the economy.
International news
ADP data out of the US yesterday was lower than expected, but still strong enough to indicate that tomorrow’s payroll figures shouldn’t provide any major surprises. PMI data also increased to 54.0 from 53.0. This US data increases speculation that the Fed will continue with its taper plan at the next FOMC meeting. Another point of interest today is the BoE rate decision which markets anticipate will be a doveish decision.
TODAYS KEY DATA POINTS (GMT):
• 11:00 DE Factory orders y/y
• 12:00 GB BoE rate decision
• 12:45 EZ ECB refi rate announcement
• 13:30 EZ ECB’s Draghi holds press conference
• 13:30 US Trade balance (USD)
• 13:30 US Initial jobless claims
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ZAR outlook
USD/ZAR expected range: 11.0500 – 11.2100
There was little action in the markets yesterday for EM currencies and they seem to be going through a period of consolidation as investor sentiment picks up again slowly. The Rand has managed to move away from its 5 year low of last week but has failed to break through the R11.06/07/USD level. This morning at 06:47GMT the local currency was sitting at R11.0950/USD slightly improved from its overnight close in New York.
Local news
Negative investor sentiment, in part due to the ongoing strike by the Association of Mineworkers and Construction Union is thought to be holding the ZAR back and keeping it from breaking through the key R11.06/07 level. The CCMA has now stepped in to try and help the parties reach a settlement but each day lost puts added strain on the economy.
International news
ADP data out of the US yesterday was lower than expected, but still strong enough to indicate that tomorrow’s payroll figures shouldn’t provide any major surprises. PMI data also increased to 54.0 from 53.0. This US data increases speculation that the Fed will continue with its taper plan at the next FOMC meeting. Another point of interest today is the BoE rate decision which markets anticipate will be a doveish decision.
TODAYS KEY DATA POINTS (GMT):
• 11:00 DE Factory orders y/y
• 12:00 GB BoE rate decision
• 12:45 EZ ECB refi rate announcement
• 13:30 EZ ECB’s Draghi holds press conference
• 13:30 US Trade balance (USD)
• 13:30 US Initial jobless claims
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Wednesday, 5 February 2014
ZAR steady as global risk sentiment improves
Trade report 05/02/2014
ZAR outlook
USD/ZAR expected range: 11.0500 – 11.2100
The ZAR has managed to maintain its recent gains on the USD, as it recovers from the volatility of last week. Direction seems to be coming from the general recovery of emerging markets as global sentiment has improved slightly. The Rand was trading at R11.1275 to the dollar at 06:49GMT, and hoping to remain steady while investors wait for further data which may provide clues regarding timing and extent of the Feds next taper.
Local news
The Rand is currently tracking other emerging market currencies which is helping it hold onto recent gains, despite the news of clashes between the police and striking mineworkers. Police fired rubber bullets and stun grenades to disperse 3000 striking workers at Amplats shaft yesterday. Looking long term the Rand is in a tricky position as further interest rate hikes are needed to reduce its twin deficits, but this would reduce inflows to bonds, which is needed to help prop up the Rand in the short-term.
International news
ADP employment data and ISM non-manufacturing PMI data are due for release from the US today, which investors will be watching for to provide further clues on the US growth trajectory, which in turn gives investors a better idea of what the Fed’s next move might be in regard to further tapering and to what extent. The Euro has gained on the GBP this morning after PMI data came in better than anticipated, and it is hoped that the region is starting to put the debt crisis behind it, although unemployment levels remain close to record highs.
TODAYS KEY DATA POINTS (GMT):
• 07:15 SA HSBC/Markit PMI
• 08:55 DE PMI services (final)
• 09:00 EZ PMI services (final)
• 09:30 GB PMI services
• 10:00 EZ Retail sales y/y
• 13:15 US ADP employment change
• 15:00 US ISM non-manufacturing composite PMI
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ZAR outlook
USD/ZAR expected range: 11.0500 – 11.2100
The ZAR has managed to maintain its recent gains on the USD, as it recovers from the volatility of last week. Direction seems to be coming from the general recovery of emerging markets as global sentiment has improved slightly. The Rand was trading at R11.1275 to the dollar at 06:49GMT, and hoping to remain steady while investors wait for further data which may provide clues regarding timing and extent of the Feds next taper.
Local news
The Rand is currently tracking other emerging market currencies which is helping it hold onto recent gains, despite the news of clashes between the police and striking mineworkers. Police fired rubber bullets and stun grenades to disperse 3000 striking workers at Amplats shaft yesterday. Looking long term the Rand is in a tricky position as further interest rate hikes are needed to reduce its twin deficits, but this would reduce inflows to bonds, which is needed to help prop up the Rand in the short-term.
International news
ADP employment data and ISM non-manufacturing PMI data are due for release from the US today, which investors will be watching for to provide further clues on the US growth trajectory, which in turn gives investors a better idea of what the Fed’s next move might be in regard to further tapering and to what extent. The Euro has gained on the GBP this morning after PMI data came in better than anticipated, and it is hoped that the region is starting to put the debt crisis behind it, although unemployment levels remain close to record highs.
TODAYS KEY DATA POINTS (GMT):
• 07:15 SA HSBC/Markit PMI
• 08:55 DE PMI services (final)
• 09:00 EZ PMI services (final)
• 09:30 GB PMI services
• 10:00 EZ Retail sales y/y
• 13:15 US ADP employment change
• 15:00 US ISM non-manufacturing composite PMI
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Tuesday, 4 February 2014
Rand enjoying more steady phase after last weeks volatility
Trade report 04/02/2014
ZAR outlook
USD/ZAR expected range: 11.1600 – 11.3100
The ZAR managed to remain steady and even firm up slightly yesterday, after reaching 5 year lows during last week’s volatility. The Rand was up 0.3% from yesterdays close, by 06:22GMT trading at R11.2400/USD. The question now is whether the currency can hold onto these gains with both local and key international data such as US non-farm payrolls due for release this week.
Local news
The emerging market sell off last week put strain on the local currency, and the markets viewed the surprising interest rate hike as insufficient. Investors will be watching to see if the SARB continues with its interest rate hike trend, although with SA experiencing weak growth this is most likely not what the SARB will want to do. In other news AMCU resumed talks this morning with platinum producers in a hope to reach a deal and end the strike which is costing the country an estimated R400m per day.
International news
PMI data from China came in disappointingly, which confirms the Asian giant is experiencing a growth slowdown. This is not good news for emerging markets, such as South Africa, that are heavily reliant on trade exports to the country. Meanwhile the GBP softened against its most traded peers after PMI data revealed an unexpected slowdown in the UK manufacturing sector. Encouraging EZ PMI data, including a return to growth for Greece, helped the EUR gain against the GBP and the USD.
TODAYS KEY DATA POINTS (GMT):
• 09:30 SA Bond auction (R2030 – 1bn; R209 – 800mn; R214 – 550mn)
• 09:30 SA SACCI business confidence
• 11:00 SA Solidarity/ETM Labour Market Index
• 09:30 GB PMI construction
• 10:00 EZ PPI y/y
• 14:45 US ISM New York PMI
• 15:00 US Factory Orders
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ZAR outlook
USD/ZAR expected range: 11.1600 – 11.3100
The ZAR managed to remain steady and even firm up slightly yesterday, after reaching 5 year lows during last week’s volatility. The Rand was up 0.3% from yesterdays close, by 06:22GMT trading at R11.2400/USD. The question now is whether the currency can hold onto these gains with both local and key international data such as US non-farm payrolls due for release this week.
Local news
The emerging market sell off last week put strain on the local currency, and the markets viewed the surprising interest rate hike as insufficient. Investors will be watching to see if the SARB continues with its interest rate hike trend, although with SA experiencing weak growth this is most likely not what the SARB will want to do. In other news AMCU resumed talks this morning with platinum producers in a hope to reach a deal and end the strike which is costing the country an estimated R400m per day.
International news
PMI data from China came in disappointingly, which confirms the Asian giant is experiencing a growth slowdown. This is not good news for emerging markets, such as South Africa, that are heavily reliant on trade exports to the country. Meanwhile the GBP softened against its most traded peers after PMI data revealed an unexpected slowdown in the UK manufacturing sector. Encouraging EZ PMI data, including a return to growth for Greece, helped the EUR gain against the GBP and the USD.
TODAYS KEY DATA POINTS (GMT):
• 09:30 SA Bond auction (R2030 – 1bn; R209 – 800mn; R214 – 550mn)
• 09:30 SA SACCI business confidence
• 11:00 SA Solidarity/ETM Labour Market Index
• 09:30 GB PMI construction
• 10:00 EZ PPI y/y
• 14:45 US ISM New York PMI
• 15:00 US Factory Orders
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Monday, 3 February 2014
Rand steady but pressure remains
Trade report 03/01/2014
ZAR outlook
USD/ZAR expected range: 11.0700 – 11.2200
The shedding of emerging market assets has slowed for the moment allowing the EM currencies a reprieve. This helped the ZAR recover slightly on Friday, although the pressure remains as this morning at 06:35GMT the ZAR was already marginally down from its close in New York on Friday and was trading at R11.1900/USD.
Local news
The SARB's decision to increase interest rates last week failed to stop the ZAR’s slump as the market viewed the move as insufficient and the ZAR reached a fresh 5 year low. The local currency is currently relatively steady against the USD, although it is thought nervous sentiment over EM currencies will most probably drive the direction of the ZAR this week.
International news
Investors will be watching out for the release of US data this week to gauge whether the encouraging improvement in the US economy is likely to be sustained, and therefore point towards a continuing of the Fed taper. Market sentiment at the moment is that this is the case, keeping SA and all emerging markets on the backfoot.
TODAYS KEY DATA POINTS (GMT):
• 09:00 SA Kagiso PMI
• SA Naamsa vehicle sales y/y
• 08:55 DE PMI manufacturing (final)
• 09:00 EZ PMI manufacturing (final)
• 09:30 GB PMI manufacturing
• 13:58 US Markit PMI manufacturing (final)
• 15:00 US ISM manufacturing PMI
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ZAR outlook
USD/ZAR expected range: 11.0700 – 11.2200
The shedding of emerging market assets has slowed for the moment allowing the EM currencies a reprieve. This helped the ZAR recover slightly on Friday, although the pressure remains as this morning at 06:35GMT the ZAR was already marginally down from its close in New York on Friday and was trading at R11.1900/USD.
Local news
The SARB's decision to increase interest rates last week failed to stop the ZAR’s slump as the market viewed the move as insufficient and the ZAR reached a fresh 5 year low. The local currency is currently relatively steady against the USD, although it is thought nervous sentiment over EM currencies will most probably drive the direction of the ZAR this week.
International news
Investors will be watching out for the release of US data this week to gauge whether the encouraging improvement in the US economy is likely to be sustained, and therefore point towards a continuing of the Fed taper. Market sentiment at the moment is that this is the case, keeping SA and all emerging markets on the backfoot.
TODAYS KEY DATA POINTS (GMT):
• 09:00 SA Kagiso PMI
• SA Naamsa vehicle sales y/y
• 08:55 DE PMI manufacturing (final)
• 09:00 EZ PMI manufacturing (final)
• 09:30 GB PMI manufacturing
• 13:58 US Markit PMI manufacturing (final)
• 15:00 US ISM manufacturing PMI
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Thursday, 30 January 2014
Capital flight from emerging markets keeps pressure on ZAR
Trade report 30/01/2014
ZAR outlook
USD/ZAR expected range: 11.1900 – 11.3700
In a surprise move yesterday the SARB went ahead and announced an increase in benchamark rates by 50bp to 5.50%. This is the first increase in rates in nearly six years. Despite this increase, the ZAR continued to slide as investors continued to sell off emerging market assets. The Rand was trading at R11.2940/$ at 08:55, only slightly firmer than its close in New York yesterday evening.
Local news
Governor Gill Marcus announced yesterday an increase in interest rates to 5.5% and her comments mentioned that this increase was not in response to Turkey’s aggressive interest rate announcement, but more is aimed at containing inflation. This small hike will not be enough to make a real impact on the current account deficit and with the SARB citing the downsides risks to growth and not committing to further hikes; the Rand continued to perform badly after the announcement. News that AMCU has rejected a 9% wage offer from leading platinum producers will further increase pressure on the ZAR today.
International news
Emerging market currencies remained under pressure yesterday as investors continued selling off EM assets after the FOMC announced a further taper by $10bn in its policy meeting last night. There were no comments about a future taper but the market is expecting the tapering to continue, putting EM currencies in a very fragile position as investors move towards safe haven assets.
TODAYS KEY DATA POINTS (GMT):
• 06:00 SA M3 money supply y/y
• 06:00 SA Private sector credit y/y
• 09:30 SA PPI y/y
• 12:00 SA Government budget balance (ZAR)
• 09:30 GB Net Consumer credit
• 10:00 EZ Consumer confidence (final)
• 13:00 DE CPI y/y (preliminary)
• 13:30 US GDP q/q annualized (advance)
• 13:30 US Initial jobless claims
Foreign exchange South Africa – Let one of our professional consultants at Currency Solutions assist you. To know more about how we can help you Contact Us
Want to know where the markets are? View our Live Currency Rates
ZAR outlook
USD/ZAR expected range: 11.1900 – 11.3700
In a surprise move yesterday the SARB went ahead and announced an increase in benchamark rates by 50bp to 5.50%. This is the first increase in rates in nearly six years. Despite this increase, the ZAR continued to slide as investors continued to sell off emerging market assets. The Rand was trading at R11.2940/$ at 08:55, only slightly firmer than its close in New York yesterday evening.
Local news
Governor Gill Marcus announced yesterday an increase in interest rates to 5.5% and her comments mentioned that this increase was not in response to Turkey’s aggressive interest rate announcement, but more is aimed at containing inflation. This small hike will not be enough to make a real impact on the current account deficit and with the SARB citing the downsides risks to growth and not committing to further hikes; the Rand continued to perform badly after the announcement. News that AMCU has rejected a 9% wage offer from leading platinum producers will further increase pressure on the ZAR today.
International news
Emerging market currencies remained under pressure yesterday as investors continued selling off EM assets after the FOMC announced a further taper by $10bn in its policy meeting last night. There were no comments about a future taper but the market is expecting the tapering to continue, putting EM currencies in a very fragile position as investors move towards safe haven assets.
TODAYS KEY DATA POINTS (GMT):
• 06:00 SA M3 money supply y/y
• 06:00 SA Private sector credit y/y
• 09:30 SA PPI y/y
• 12:00 SA Government budget balance (ZAR)
• 09:30 GB Net Consumer credit
• 10:00 EZ Consumer confidence (final)
• 13:00 DE CPI y/y (preliminary)
• 13:30 US GDP q/q annualized (advance)
• 13:30 US Initial jobless claims
Foreign exchange South Africa – Let one of our professional consultants at Currency Solutions assist you. To know more about how we can help you Contact Us
Want to know where the markets are? View our Live Currency Rates
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