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
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Thursday 30 January 2014
Wednesday 29 January 2014
Rand slides after Turkey announces rate hike
Trade report 29/01/2014
ZAR outlook
USD/ZAR expected range: 10.8400 – 11.0200
The ZAR managed to firm up late yesterday and started off this morning below the key level of R11.00/USD to R10.9530 at 06:43GMT this morning but in the later part of the session started slipping again and dropped to around R11.1900/USD. This comes just before the scheduled interest rate announcement by the SARB and after Turkey announced an aggressive interest rate hike last night.
Local news
General feeling in the markets has been that Reserve Bank Governor Gill Marcus would leave interest rates unchanged, but analysts are now not so certain after Turkey announced an aggressive interest rate hike last night. The reasoning is that after many rate hikes by other EM economies the SA economy will be left behind if they do not follow suit and investors will be attracted to other economies.
International news
The main focus on the international front will be the FOMC meeting and the announcement which follows at 19:00GMT. There has been question over whether the taper will go ahead especially after major losses in emerging market assets but general feeling is that the Fed will go ahead with a taper of another $10bn. which would put pressure on an already struggling ZAR.
TODAYS KEY DATA POINTS (GMT):
• 13:00 SA SARB rate announcement
• 07:00 GB Nationwide house prices nsa y/y
• 07:00 DE GfK consumer confidence
• 09:00 EZ M3 money supply sa y/y
• 09:00 EZ European Commission releases review of Spain’s banks
• 12:00 US MBA mortgage applications
• 19:00 US FOMC rate and policy decision
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ZAR outlook
USD/ZAR expected range: 10.8400 – 11.0200
The ZAR managed to firm up late yesterday and started off this morning below the key level of R11.00/USD to R10.9530 at 06:43GMT this morning but in the later part of the session started slipping again and dropped to around R11.1900/USD. This comes just before the scheduled interest rate announcement by the SARB and after Turkey announced an aggressive interest rate hike last night.
Local news
General feeling in the markets has been that Reserve Bank Governor Gill Marcus would leave interest rates unchanged, but analysts are now not so certain after Turkey announced an aggressive interest rate hike last night. The reasoning is that after many rate hikes by other EM economies the SA economy will be left behind if they do not follow suit and investors will be attracted to other economies.
International news
The main focus on the international front will be the FOMC meeting and the announcement which follows at 19:00GMT. There has been question over whether the taper will go ahead especially after major losses in emerging market assets but general feeling is that the Fed will go ahead with a taper of another $10bn. which would put pressure on an already struggling ZAR.
TODAYS KEY DATA POINTS (GMT):
• 13:00 SA SARB rate announcement
• 07:00 GB Nationwide house prices nsa y/y
• 07:00 DE GfK consumer confidence
• 09:00 EZ M3 money supply sa y/y
• 09:00 EZ European Commission releases review of Spain’s banks
• 12:00 US MBA mortgage applications
• 19:00 US FOMC rate and policy decision
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Tuesday 28 January 2014
Rand manages to steady despite ongoing strikes
Trade report 28/01/2014
ZAR outlook
USD/ZAR expected range: 10.9900 – 11.1500
EM currencies in general have been under the whip as investors fear their ability to maintain economic growth at their low interest rate levels. This fear is heightened as talk about the next round of tapering at the FOMC intensifies. The ZAR fell to fresh 5 year lows yesterday but this morning has managed to firm up. The Rand was trading at R11.0910/USD at 06:51GMT this morning, 0.26% up from its close in New York yesterday at R11.2550/USD.
Local news
The ZAR has been one of the worst performing EM’s along with the Turkish lira. The lira has rallied today after news that its central bank has called an emergency meeting tonight which is expected to result in an interest rate hike. Locally the SARB is due to announce its interest rate decision tomorrow after its policy meeting and although a hike would be good for the Rand strength, economists expect the rates to remain unchanged as the SARB tries to support the ailing economy and consumers struggling with debt. Meanwhile strikes at the world’s top three platinum mines continue, equating to around R100m in lost revenue per day at market prices.
International news
US new home sales came in softer than expected yesterday, dropping from 3.9% in November to 7.0% in December m/m which may be a factor in deciding on the extent of the taper at the next FOMC meeting which starts today. In other news, the GBP has strengthened on stats released that show the UK has expanded by 0.7% in the last quarter of 2013, meaning 2013 was the country's best year since the start of the global financial crisis in 2013.
TODAYS KEY DATA POINTS (GMT):
• 09:30 SA Bond auction (R2030 – 1bn; R2037 – 1bn, R214 – 350mn)
• 13:30 US Durable goods orders m/m
• 14:00 US S&P/Case-Shiller house price composite-20y/y
• 15:00 US Consumer confidence
• 15:00 US Richmond Fed manufacturing index
• US FOMC begins
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ZAR outlook
USD/ZAR expected range: 10.9900 – 11.1500
EM currencies in general have been under the whip as investors fear their ability to maintain economic growth at their low interest rate levels. This fear is heightened as talk about the next round of tapering at the FOMC intensifies. The ZAR fell to fresh 5 year lows yesterday but this morning has managed to firm up. The Rand was trading at R11.0910/USD at 06:51GMT this morning, 0.26% up from its close in New York yesterday at R11.2550/USD.
Local news
The ZAR has been one of the worst performing EM’s along with the Turkish lira. The lira has rallied today after news that its central bank has called an emergency meeting tonight which is expected to result in an interest rate hike. Locally the SARB is due to announce its interest rate decision tomorrow after its policy meeting and although a hike would be good for the Rand strength, economists expect the rates to remain unchanged as the SARB tries to support the ailing economy and consumers struggling with debt. Meanwhile strikes at the world’s top three platinum mines continue, equating to around R100m in lost revenue per day at market prices.
International news
US new home sales came in softer than expected yesterday, dropping from 3.9% in November to 7.0% in December m/m which may be a factor in deciding on the extent of the taper at the next FOMC meeting which starts today. In other news, the GBP has strengthened on stats released that show the UK has expanded by 0.7% in the last quarter of 2013, meaning 2013 was the country's best year since the start of the global financial crisis in 2013.
TODAYS KEY DATA POINTS (GMT):
• 09:30 SA Bond auction (R2030 – 1bn; R2037 – 1bn, R214 – 350mn)
• 13:30 US Durable goods orders m/m
• 14:00 US S&P/Case-Shiller house price composite-20y/y
• 15:00 US Consumer confidence
• 15:00 US Richmond Fed manufacturing index
• US FOMC begins
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Monday 27 January 2014
Emerging market currencies under pressure ahead of FOMC meeting
Trade report 27/01/2014
ZAR outlook
USD/ZAR expected range: 11.0600 – 11.2300
Last week was a blow to the Rand as local strike action, on top of investor concerns over EM countries ahead of the next FOMC meeting, helped the currency sink to fresh 5 years low. At 06:55GMT this morning the ZAR was trading at R11.1480, already 0.5% down from its close in New York on Friday evening.
Local news
This week sees the SARB announce its interest rate decision on Wednesday. Investors will want to see a hawkish approach but economists generally suspect the bank will keep its repo rate unchanged at 5% due to SA households struggling with debt and high fuel prices. Meanwhile AMCU will continue government-brokered talks with mining companies today in the hope of reaching an agreement over pay disputes and ending the strike which is weighing on the ZAR.
International news
Emerging markets are under pressure this week as investors push back towards “safe haven” assets, over concern of Fed tapering at the next FOMC meeting. This concern is heightened as China, a key source of trade for many emerging markets, is showing signs of an economic slowdown. “We expect the Rand to remain at the mercy of emerging market sentiment over the coming week,” ABSA Capital analysts wrote in a note.
TODAYS KEY DATA POINTS (GMT):
• 09:00 DE IFO business climate
• 11:30 EZ ECB’s Constancio, BoE’s Cunliffe speak
• 15:00 US New home sales
• 15:30 US Dallas Fed manufacturing activity
• 18:00 EZ ECB’s Weidmann speaks
•
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ZAR outlook
USD/ZAR expected range: 11.0600 – 11.2300
Last week was a blow to the Rand as local strike action, on top of investor concerns over EM countries ahead of the next FOMC meeting, helped the currency sink to fresh 5 years low. At 06:55GMT this morning the ZAR was trading at R11.1480, already 0.5% down from its close in New York on Friday evening.
Local news
This week sees the SARB announce its interest rate decision on Wednesday. Investors will want to see a hawkish approach but economists generally suspect the bank will keep its repo rate unchanged at 5% due to SA households struggling with debt and high fuel prices. Meanwhile AMCU will continue government-brokered talks with mining companies today in the hope of reaching an agreement over pay disputes and ending the strike which is weighing on the ZAR.
International news
Emerging markets are under pressure this week as investors push back towards “safe haven” assets, over concern of Fed tapering at the next FOMC meeting. This concern is heightened as China, a key source of trade for many emerging markets, is showing signs of an economic slowdown. “We expect the Rand to remain at the mercy of emerging market sentiment over the coming week,” ABSA Capital analysts wrote in a note.
TODAYS KEY DATA POINTS (GMT):
• 09:00 DE IFO business climate
• 11:30 EZ ECB’s Constancio, BoE’s Cunliffe speak
• 15:00 US New home sales
• 15:30 US Dallas Fed manufacturing activity
• 18:00 EZ ECB’s Weidmann speaks
•
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Friday 24 January 2014
ZAR breaches R11/USD level as strikes continue
Trade report 24/01/2014
ZAR outlook
USD/ZAR expected range: 10.9400 – 11.0800
The Rand breached the psychologically important level of R11/USD yesterday. The ZAR also fell significantly against the GBP and the EUR reaching R18.2789/GBP and R14.9689/EUR respectively as strike action further dented investor appetite. With a possible taper at next week’s FOMC analysts are doubtful that the ZAR will be able to show a meaningful recovery in the short term. The ZAR was trading at R11.0200/USD at 06:35 GMT this morning, 0.2% down on its close in New York yesterday.
Local news
The current strike action by AMCU workers is taking its toll on the local currency as investors are keeping their distance nervous of a repeat of the violence that broke out at Lonmin mines in 2012. The government is meeting with AMCU and platinum sector representatives this morning in the hope that a resolution can be agreed upon. Adding to the ZAR’s woes are the high current account and budget deficits and the SARBs reluctance to raise interest rates. This leaves the Rand particularly vulnerable should the Fed go ahead with taper plans at the next FOMC meeting next week.
International news
There is no key data on the international side due for release today. This leaves the ZAR’s movements mainly dependant on local strike action updates. The markets will most likely be consolidating after the week’s events and investors will be keenly waiting for news from the FOMC meeting scheduled for next week.
TODAYS KEY DATA POINTS (GMT):
• 09:30 SA ILB auction (R800mn)
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ZAR outlook
USD/ZAR expected range: 10.9400 – 11.0800
The Rand breached the psychologically important level of R11/USD yesterday. The ZAR also fell significantly against the GBP and the EUR reaching R18.2789/GBP and R14.9689/EUR respectively as strike action further dented investor appetite. With a possible taper at next week’s FOMC analysts are doubtful that the ZAR will be able to show a meaningful recovery in the short term. The ZAR was trading at R11.0200/USD at 06:35 GMT this morning, 0.2% down on its close in New York yesterday.
Local news
The current strike action by AMCU workers is taking its toll on the local currency as investors are keeping their distance nervous of a repeat of the violence that broke out at Lonmin mines in 2012. The government is meeting with AMCU and platinum sector representatives this morning in the hope that a resolution can be agreed upon. Adding to the ZAR’s woes are the high current account and budget deficits and the SARBs reluctance to raise interest rates. This leaves the Rand particularly vulnerable should the Fed go ahead with taper plans at the next FOMC meeting next week.
International news
There is no key data on the international side due for release today. This leaves the ZAR’s movements mainly dependant on local strike action updates. The markets will most likely be consolidating after the week’s events and investors will be keenly waiting for news from the FOMC meeting scheduled for next week.
TODAYS KEY DATA POINTS (GMT):
• 09:30 SA ILB auction (R800mn)
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Thursday 23 January 2014
Rand facing fresh 5 year lows as strikes go ahead
Trade report 23/01/2014
ZAR outlook
USD/ZAR expected range: 10.7700 – 10.9500
The ZAR is currently on the backfoot despite a better start to the week as the AMCU strike started this morning causing the local currency to face new 5 year lows. The ZAR was down 0.46% from its close in New York yesterday, by 06:47GMT this morning, trading at R10.9250, and looking to weaken even further.
Local news
More than 100 000 workers have downed tools today from Anglo American Platinum, Impala Platinum and Lonmin, three of the world’s top producers of platinum. The government’s attempt at talks yesterday proved fruitless and it remains to be seen whether mediation by Deputy President Motlanthe tomorrow will produce results. Theses strikes have huge negative effects on the country’s economic growth and put international businesses off investing in such a volatile labour climate.
International news
HSBC flash manufacturing PMI released in China has dropped to 49.6 from 50.5, which is further indication that economic growth in the country is on the slowdown. This is not good news for EM currencies, such as South Africa that rely on China as an export destination. There is also an increase in data releases from today including US jobless claims, PMI manufacturing and home sales which investors will be keenly watching for further evidence that the Fed will continue with it taper plans at the FOMC next week.
TODAYS KEY DATA POINTS (GMT):
• 08:30 DE PMI Composite (advance)
• 09:00 EZ Current account sa (EUR)
• 09:00 EZ PMI Composite (advance)
• 13:30 US Initial jobless claims
• 13:58 US Markit PMI manufacturing
• 14:00 US House price index m/m
• 15:00 EZ Consumer confidence (advance)
• 15:00 US Existing home sales
• 15:00 US Leading indicators
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ZAR outlook
USD/ZAR expected range: 10.7700 – 10.9500
The ZAR is currently on the backfoot despite a better start to the week as the AMCU strike started this morning causing the local currency to face new 5 year lows. The ZAR was down 0.46% from its close in New York yesterday, by 06:47GMT this morning, trading at R10.9250, and looking to weaken even further.
Local news
More than 100 000 workers have downed tools today from Anglo American Platinum, Impala Platinum and Lonmin, three of the world’s top producers of platinum. The government’s attempt at talks yesterday proved fruitless and it remains to be seen whether mediation by Deputy President Motlanthe tomorrow will produce results. Theses strikes have huge negative effects on the country’s economic growth and put international businesses off investing in such a volatile labour climate.
International news
HSBC flash manufacturing PMI released in China has dropped to 49.6 from 50.5, which is further indication that economic growth in the country is on the slowdown. This is not good news for EM currencies, such as South Africa that rely on China as an export destination. There is also an increase in data releases from today including US jobless claims, PMI manufacturing and home sales which investors will be keenly watching for further evidence that the Fed will continue with it taper plans at the FOMC next week.
TODAYS KEY DATA POINTS (GMT):
• 08:30 DE PMI Composite (advance)
• 09:00 EZ Current account sa (EUR)
• 09:00 EZ PMI Composite (advance)
• 13:30 US Initial jobless claims
• 13:58 US Markit PMI manufacturing
• 14:00 US House price index m/m
• 15:00 EZ Consumer confidence (advance)
• 15:00 US Existing home sales
• 15:00 US Leading indicators
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Wednesday 22 January 2014
Rand weakens as strike action looms
Trade report 22/01/2014
ZAR outlook
USD/ZAR expected range: 10.7700 – 10.9100
The ZAR managed to hold steady most of yesterday, but this morning has weakened again as the threat of strike action intensifies and investors tread cautiously ahead of inflation data due for release today. The Rand was trading at R10.8500/USD at 06:43 GMT this morning, down 0.25% from its R10.8240 in New York yesterday evening.
Local news
Surprisingly, the Rand was the best performing EM currency yesterday. One of the reasons for this may be talk over the Telkom deal with a Southeast Asian company, which would be good news for the local currency. The government meanwhile is promising to facilitate talks today to try avert the imminent strike action, which will damage economic growth should they go ahead as planned.
International news
There has been little news in the form of international data releases. Investors will be keenly awaiting the next set of key US data as this will give a good indication of whether there will be additional tapering at the next FOMC meeting. Meanwhile, the GBP has made gains on the EUR as UK unemployment figures released this morning, have come in better than anticipated.
TODAYS KEY DATA POINTS (GMT):
• 08:00 SA CPI y/y
• JP BoJ rate and policy decision
• JP BoJ policy statement
• 09:30 GB ILO unemployment rate (3 mths)
• 09:30 GB BoE releases MPC minutes
• 12:00 US MBA mortgage applications
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ZAR outlook
USD/ZAR expected range: 10.7700 – 10.9100
The ZAR managed to hold steady most of yesterday, but this morning has weakened again as the threat of strike action intensifies and investors tread cautiously ahead of inflation data due for release today. The Rand was trading at R10.8500/USD at 06:43 GMT this morning, down 0.25% from its R10.8240 in New York yesterday evening.
Local news
Surprisingly, the Rand was the best performing EM currency yesterday. One of the reasons for this may be talk over the Telkom deal with a Southeast Asian company, which would be good news for the local currency. The government meanwhile is promising to facilitate talks today to try avert the imminent strike action, which will damage economic growth should they go ahead as planned.
International news
There has been little news in the form of international data releases. Investors will be keenly awaiting the next set of key US data as this will give a good indication of whether there will be additional tapering at the next FOMC meeting. Meanwhile, the GBP has made gains on the EUR as UK unemployment figures released this morning, have come in better than anticipated.
TODAYS KEY DATA POINTS (GMT):
• 08:00 SA CPI y/y
• JP BoJ rate and policy decision
• JP BoJ policy statement
• 09:30 GB ILO unemployment rate (3 mths)
• 09:30 GB BoE releases MPC minutes
• 12:00 US MBA mortgage applications
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Tuesday 21 January 2014
Rand steady ahead of strike action
Trade report 21/01/2014
ZAR outlook
USD/ZAR expected range: 10.7800 – 10.9200
Yesterday was a fairly quiet day in the markets owing mainly to the public holiday in the US and the fact that there was no real key economic data to speak of. The Rand has managed to remain steady in the last few sessions and slowly retreat from its recent 5 year low levels. The ZAR was trading at R10.8500/USD at 06:47 GMT this morning, very close to its R10.8295 close in New York yesterday evening.
Local news
The ZAR managed to perform well yesterday compared to its EMEA peers mainly due to the rally in gold and platinum prices. This, despite the news that members of the Association of Mineworkers and Construction Union served platinum and gold mines with 48 hour strike notices yesterday. All eyes this week will be on the unfolding strike news in the hope that they can be averted.
International news
Trading volumes should increase today after yesterday’s US public holiday but with very little key data due for release until Wed and Thursday the next few sessions will most likely mean calm consolidation for most EM currencies. Meanwhile the GBP has lost recent gains on the EUR as data released today show a drop in UK business confidence, although tomorrows UK employment figures will be much more influential.
TODAYS KEY DATA POINTS (GMT):
• 07:00 SA Leading indicator
• 09:30 SA Bond auction (R2030 – 550mn; R2037 – 1bn; R2048 – 800mn)
• EZ German Constitutional Court ruling on OMT
• 10:00 DE ZEW economic sentiment
• 10:00 EZ ZEW economic sentiment
• 14:30 US IMF releases World Economic Outlook revisions
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ZAR outlook
USD/ZAR expected range: 10.7800 – 10.9200
Yesterday was a fairly quiet day in the markets owing mainly to the public holiday in the US and the fact that there was no real key economic data to speak of. The Rand has managed to remain steady in the last few sessions and slowly retreat from its recent 5 year low levels. The ZAR was trading at R10.8500/USD at 06:47 GMT this morning, very close to its R10.8295 close in New York yesterday evening.
Local news
The ZAR managed to perform well yesterday compared to its EMEA peers mainly due to the rally in gold and platinum prices. This, despite the news that members of the Association of Mineworkers and Construction Union served platinum and gold mines with 48 hour strike notices yesterday. All eyes this week will be on the unfolding strike news in the hope that they can be averted.
International news
Trading volumes should increase today after yesterday’s US public holiday but with very little key data due for release until Wed and Thursday the next few sessions will most likely mean calm consolidation for most EM currencies. Meanwhile the GBP has lost recent gains on the EUR as data released today show a drop in UK business confidence, although tomorrows UK employment figures will be much more influential.
TODAYS KEY DATA POINTS (GMT):
• 07:00 SA Leading indicator
• 09:30 SA Bond auction (R2030 – 550mn; R2037 – 1bn; R2048 – 800mn)
• EZ German Constitutional Court ruling on OMT
• 10:00 DE ZEW economic sentiment
• 10:00 EZ ZEW economic sentiment
• 14:30 US IMF releases World Economic Outlook revisions
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Monday 20 January 2014
Rand rallys but strikes likely to add pressure
Trade report 20/01/2014
ZAR outlook
USD/ZAR expected range: 10.7800 – 10.9200
The ZAR has managed to rally over the last two sessions and has been holding steady against the USD in early trade today. But data out of China and the threat of strike action will most likely put pressure back on the local currency as the week progresses. The ZAR was trading at USD10.8925/USD at 09:45GMT, slightly down from the R10.8700/USD at close of business in New York on Friday.
Local news
At a time when the Rand has been under intense pressure the economy cannot afford more labour unrest, but AMCU members are preparing to go on strike in the platinum and gold sectors over pay disputes from Thursday morning. The news this morning that Q4 GDP growth in China slowed to 7.7% y/y from Q3’s 7.8% will also weigh on the local currency as this helps confirm expectations that China is headed for a gradual slowdown with China being South Africa’s largest trading partner.
International news
Today will be a quiet day in the markets as the US celebrates Martin Luther King Day, along with full market closure. Key data is due for release from Thursday with PMI’s from the major economies while on the local side CPI data is due out on Wednesday. Last week’s upbeat US retail and manufacturing data have investors fairly convinced that we will see another small taper at the FOMC meeting next week.
TODAYS KEY DATA POINTS (GMT):
• US Market holiday (Martin Luther King Jr. Day)
• 02:00 CN Real GDP y/y
• 02:00 CN Industrial production YTD y/y
• 04:30 JP Industrial production y/y (final)
• 06:00 JP Machine tool orders y/y (final)
• 07:00 DE Foreign prices y/y
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ZAR outlook
USD/ZAR expected range: 10.7800 – 10.9200
The ZAR has managed to rally over the last two sessions and has been holding steady against the USD in early trade today. But data out of China and the threat of strike action will most likely put pressure back on the local currency as the week progresses. The ZAR was trading at USD10.8925/USD at 09:45GMT, slightly down from the R10.8700/USD at close of business in New York on Friday.
Local news
At a time when the Rand has been under intense pressure the economy cannot afford more labour unrest, but AMCU members are preparing to go on strike in the platinum and gold sectors over pay disputes from Thursday morning. The news this morning that Q4 GDP growth in China slowed to 7.7% y/y from Q3’s 7.8% will also weigh on the local currency as this helps confirm expectations that China is headed for a gradual slowdown with China being South Africa’s largest trading partner.
International news
Today will be a quiet day in the markets as the US celebrates Martin Luther King Day, along with full market closure. Key data is due for release from Thursday with PMI’s from the major economies while on the local side CPI data is due out on Wednesday. Last week’s upbeat US retail and manufacturing data have investors fairly convinced that we will see another small taper at the FOMC meeting next week.
TODAYS KEY DATA POINTS (GMT):
• US Market holiday (Martin Luther King Jr. Day)
• 02:00 CN Real GDP y/y
• 02:00 CN Industrial production YTD y/y
• 04:30 JP Industrial production y/y (final)
• 06:00 JP Machine tool orders y/y (final)
• 07:00 DE Foreign prices y/y
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Friday 17 January 2014
Rand slightly firmer after volatile week
Trade report 17/01/2014
ZAR outlook
USD/ZAR expected range: 10.8000 – 10.9500
The Rand enjoyed a temporary reprieve yesterday and moved away from the key level of R11.00/USD after poor US jobless numbers were released. The ZAR was trading at R10.8750/USD by 06:30GMT this morning, 0.2% stronger than its close in New York yesterday. Should the Rand manage to hold onto these levels it will show its first positive day this week.
Local news
The ZAR has had a volatile week and comes in as the second worst EM performer over the week as ranked by Bloomberg. The threat of strikes in the platinum mines continues to dampen investor appetite and the large current account and budget deficits remain key issues. Added to this the USD is enjoying a period of strong gains which helps keep the Rand on the backfoot.
International news
The poor US jobless data has helped give EM currencies a temporary reprieve but economists don’t think this will affect the taper decision at the FOMC next week as the stronger focus will remain on the better than anticipated US data from earlier in the week, which include retail sales and Empire manufacturing growth. The USD has strengthened this week no small part to the fact that the markets expect tapering to continue this year with a small taper at next week’s meeting a likelihood.
TODAYS KEY DATA POINTS (GMT):
• 09:30 SA ILB auction (R800mn)
• 09:30 GB Retail sales excluding auto fuel y/y
• 10:00 EZ Construction output wda y/y
• 13:30 US Housing starts
• 13:30 US Building permits
• 14:15 US Industrial production m/m
• 14:55 US Michigan consumer confidence (preliminary)
• 17:30 US Fed’s Lacker speaks on economic outlook
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ZAR outlook
USD/ZAR expected range: 10.8000 – 10.9500
The Rand enjoyed a temporary reprieve yesterday and moved away from the key level of R11.00/USD after poor US jobless numbers were released. The ZAR was trading at R10.8750/USD by 06:30GMT this morning, 0.2% stronger than its close in New York yesterday. Should the Rand manage to hold onto these levels it will show its first positive day this week.
Local news
The ZAR has had a volatile week and comes in as the second worst EM performer over the week as ranked by Bloomberg. The threat of strikes in the platinum mines continues to dampen investor appetite and the large current account and budget deficits remain key issues. Added to this the USD is enjoying a period of strong gains which helps keep the Rand on the backfoot.
International news
The poor US jobless data has helped give EM currencies a temporary reprieve but economists don’t think this will affect the taper decision at the FOMC next week as the stronger focus will remain on the better than anticipated US data from earlier in the week, which include retail sales and Empire manufacturing growth. The USD has strengthened this week no small part to the fact that the markets expect tapering to continue this year with a small taper at next week’s meeting a likelihood.
TODAYS KEY DATA POINTS (GMT):
• 09:30 SA ILB auction (R800mn)
• 09:30 GB Retail sales excluding auto fuel y/y
• 10:00 EZ Construction output wda y/y
• 13:30 US Housing starts
• 13:30 US Building permits
• 14:15 US Industrial production m/m
• 14:55 US Michigan consumer confidence (preliminary)
• 17:30 US Fed’s Lacker speaks on economic outlook
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Thursday 16 January 2014
ZAR and other EM currencies battling against upbeat USD
Trade report 16/01/2014
ZAR outlook
USD/ZAR expected range: 10.8200 – 10.9800
Pressure on the ZAR remained yesterday and this morning the local currency dropped to a new 5-year low of R10.95/USD, nearly 0.7% down from its close in New York on Wednesday evening. The strnger than expected US Empire manufacturing data has reinforced taper expectations at the FOMC next week.
Local news
SA data released yesterday was a mixed bag as Kagiso PMI for December disappointed by dropping below the neutral 50.0 mark for the first time since April 2013, but Nov retail sales data was a surprise to the topside as it showed growth of 4.2% y/y from a prior 1.4%. The question now is whether this is sustainable given the rising costs of food and fuel and general poor credit health in households.
International news
The general feeling in the markets is that the Fed will continue with its QE taper at the FOMC meeting scheduled for next week, given the positive US data recently released, indicative of an economy that is growing steadily. Investors will be keenly awaiting comments from voting Fed member Bernanke for confirmation of this.
TODAYS KEY DATA POINTS (GMT):
• 07:00 DE CPI y/y (final)
• 10:00 EZ CPI y/y (final)
• 13:30 US CPI y/y
• 14:00 US Net long term TIC flows
• 15:00 US Philadelphia Fed index
• 15:00 US NAHB Housing market index
• 16:10 US Fed’s Bernanke speaks
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ZAR outlook
USD/ZAR expected range: 10.8200 – 10.9800
Pressure on the ZAR remained yesterday and this morning the local currency dropped to a new 5-year low of R10.95/USD, nearly 0.7% down from its close in New York on Wednesday evening. The strnger than expected US Empire manufacturing data has reinforced taper expectations at the FOMC next week.
Local news
SA data released yesterday was a mixed bag as Kagiso PMI for December disappointed by dropping below the neutral 50.0 mark for the first time since April 2013, but Nov retail sales data was a surprise to the topside as it showed growth of 4.2% y/y from a prior 1.4%. The question now is whether this is sustainable given the rising costs of food and fuel and general poor credit health in households.
International news
The general feeling in the markets is that the Fed will continue with its QE taper at the FOMC meeting scheduled for next week, given the positive US data recently released, indicative of an economy that is growing steadily. Investors will be keenly awaiting comments from voting Fed member Bernanke for confirmation of this.
TODAYS KEY DATA POINTS (GMT):
• 07:00 DE CPI y/y (final)
• 10:00 EZ CPI y/y (final)
• 13:30 US CPI y/y
• 14:00 US Net long term TIC flows
• 15:00 US Philadelphia Fed index
• 15:00 US NAHB Housing market index
• 16:10 US Fed’s Bernanke speaks
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Wednesday 15 January 2014
Rand struggling as it approaches new 5-year low
Trade report 15/01/2014
ZAR outlook
USD/ZAR expected range: 10.8200 – 10.9800
The pressure on the Rand continues as the currency weakened towards a fresh 5-year low this morning against the USD which has been boosted by encouraging US data. The ZAR was trading at R10.8660/USD at 06:44 GMT this morning, down 0.3% from its close in New York yesterday evening.
Local news
Domestic retail sales and manufacturing data are due for release today. Economists are expecting a drop in year-on-year growth for November retail sales which will add to the ZARs woes as it creates a subdued outlook for 2013 GDP. Recent Chinese data released predicts a growth slowdown in 2014, also a negative factor for South Africa as it affects exports and leads commodity process lower.
International news
The USD enjoyed a boost yesterday as retail sales and inventories showed that the US economy is growing steadily. This adds to speculation that the Fed will go ahead with their taper plans especially after hawkish comments by Fed members yesterday hinting that they would like to see an end to the programme before the late part of 2014.
TODAYS KEY DATA POINTS (GMT):
• 09:00 SA Kagiso PMI
• 11:00 SA Retail sales constant y/y
• 08:00 DE GDP nsa y/y
• 10:00 EZ Trade balance sa (EUR)
• 13:30 US Empire manufacturing
• 13:30 US PPI y/y
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ZAR outlook
USD/ZAR expected range: 10.8200 – 10.9800
The pressure on the Rand continues as the currency weakened towards a fresh 5-year low this morning against the USD which has been boosted by encouraging US data. The ZAR was trading at R10.8660/USD at 06:44 GMT this morning, down 0.3% from its close in New York yesterday evening.
Local news
Domestic retail sales and manufacturing data are due for release today. Economists are expecting a drop in year-on-year growth for November retail sales which will add to the ZARs woes as it creates a subdued outlook for 2013 GDP. Recent Chinese data released predicts a growth slowdown in 2014, also a negative factor for South Africa as it affects exports and leads commodity process lower.
International news
The USD enjoyed a boost yesterday as retail sales and inventories showed that the US economy is growing steadily. This adds to speculation that the Fed will go ahead with their taper plans especially after hawkish comments by Fed members yesterday hinting that they would like to see an end to the programme before the late part of 2014.
TODAYS KEY DATA POINTS (GMT):
• 09:00 SA Kagiso PMI
• 11:00 SA Retail sales constant y/y
• 08:00 DE GDP nsa y/y
• 10:00 EZ Trade balance sa (EUR)
• 13:30 US Empire manufacturing
• 13:30 US PPI y/y
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Tuesday 14 January 2014
Poor economic outlook keeps Rand under pressure
Trade report 14/01/2014
ZAR outlook
USD/ZAR expected range: 10.7300 – 10.8800
After the Rands temporary reprieve on Friday afternoon and Monday morning the ZAR is once again under pressure and close to another five year low. Investor appetite has been severely dampened mainly due to the weak outlook for the SA economy. By 06:52 GMT the ZAR was trading at R10.8350/USD, barely changed from its overnight close in New York on Monday evening.
Local news
The ZAR remains one of the poorest performing EM currencies as local issues keep investors at bay. The threat of renewed strike action in the mining industry and a warning from Eskom that the country may be facing electricity shortages in the months ahead are two of the issues dampening investor appetite and holding back the countries projected economic growth.
International news
The poor US non-farm payrolls data continued to hold back the USD at the start of the week and investors are now waiting for the release of the US retail sales growth data which economists have predicted will show a slow-down. This will add to speculation that the Fed may decide against faster tapering of it bond buying programme. The Pound weakened against most of its peers yesterday after data was released showing the UK index had dropped to its lowest level in three weeks, after last week’s negative data releases.
TODAYS KEY DATA POINTS (GMT):
• 09:30 SA Mining production y/y
• 09:30 SA Bond auction (R2030 – 1bn; R214 – 800mn; R186 – 550mn)
• 09:30 GB CPI y/y
• 10:00 EZ Industrial production (wda) y/y
• 13:30 US Advance retail sales index
• 13:30 US Import price index y/y
• 15:00 US Business inventories m/m
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ZAR outlook
USD/ZAR expected range: 10.7300 – 10.8800
After the Rands temporary reprieve on Friday afternoon and Monday morning the ZAR is once again under pressure and close to another five year low. Investor appetite has been severely dampened mainly due to the weak outlook for the SA economy. By 06:52 GMT the ZAR was trading at R10.8350/USD, barely changed from its overnight close in New York on Monday evening.
Local news
The ZAR remains one of the poorest performing EM currencies as local issues keep investors at bay. The threat of renewed strike action in the mining industry and a warning from Eskom that the country may be facing electricity shortages in the months ahead are two of the issues dampening investor appetite and holding back the countries projected economic growth.
International news
The poor US non-farm payrolls data continued to hold back the USD at the start of the week and investors are now waiting for the release of the US retail sales growth data which economists have predicted will show a slow-down. This will add to speculation that the Fed may decide against faster tapering of it bond buying programme. The Pound weakened against most of its peers yesterday after data was released showing the UK index had dropped to its lowest level in three weeks, after last week’s negative data releases.
TODAYS KEY DATA POINTS (GMT):
• 09:30 SA Mining production y/y
• 09:30 SA Bond auction (R2030 – 1bn; R214 – 800mn; R186 – 550mn)
• 09:30 GB CPI y/y
• 10:00 EZ Industrial production (wda) y/y
• 13:30 US Advance retail sales index
• 13:30 US Import price index y/y
• 15:00 US Business inventories m/m
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Monday 13 January 2014
Poor US data allows ZAR a reprieve
Trade report 11/01/2014
ZAR outlook
USD/ZAR expected range: 10.5800 – 10.7300
The surprisingly low US non-farm payrolls data provided the ZAR with some much needed relief on Friday afternoon and the Rand managed to firm up and retreat from its 5 year lows of last week. This morning at 06:46GMT the Rand was trading at R10.6650/USD, only 0.14% softer than its close in New York on Friday evening.
Local news
Despite the slight recovery by the ZAR over the last few sessions, South Africa’s continued reliance on external funding continues to keep pressure on the currency and although the recent volatility should decline this week, it is generally thought the weakening trend will slowly resume. This is mainly due to the countries weak domestic growth outlook and dented investor appetite due to the threat of strike action.
International news
US non-farm payrolls data revealed that the US economy added only 74 000 jobs in December which was well below the expected 197 000. The data is said to be largely affected by adverse weather conditions, and economists don’t believe it will be the start of a trend, although January’s figures could be similarly affected. Investors meanwhile will be keenly awaiting the next string of US data releases due out during the course of the week.
TODAYS KEY DATA POINTS (GMT):
• JP Market holiday (Coming of Age Day)
• 17:40 US Fed’s Lockhard speaks
• 19:00 US Monthly budget statement
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ZAR outlook
USD/ZAR expected range: 10.5800 – 10.7300
The surprisingly low US non-farm payrolls data provided the ZAR with some much needed relief on Friday afternoon and the Rand managed to firm up and retreat from its 5 year lows of last week. This morning at 06:46GMT the Rand was trading at R10.6650/USD, only 0.14% softer than its close in New York on Friday evening.
Local news
Despite the slight recovery by the ZAR over the last few sessions, South Africa’s continued reliance on external funding continues to keep pressure on the currency and although the recent volatility should decline this week, it is generally thought the weakening trend will slowly resume. This is mainly due to the countries weak domestic growth outlook and dented investor appetite due to the threat of strike action.
International news
US non-farm payrolls data revealed that the US economy added only 74 000 jobs in December which was well below the expected 197 000. The data is said to be largely affected by adverse weather conditions, and economists don’t believe it will be the start of a trend, although January’s figures could be similarly affected. Investors meanwhile will be keenly awaiting the next string of US data releases due out during the course of the week.
TODAYS KEY DATA POINTS (GMT):
• JP Market holiday (Coming of Age Day)
• 17:40 US Fed’s Lockhard speaks
• 19:00 US Monthly budget statement
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Friday 10 January 2014
EM currencies under pressure
Trade report 10/01/2014
ZAR outlook
USD/ZAR expected range: 10.7300 – 10.8800
EM currencies have been under considerable pressure this week as the USD has been enjoying a period of strong positive momentum. The ZAR touched a new 5-year low against the USD yesterday, at R10.8330/USD, although this morning has firmed up slightly, but may face renewed pressure later if US non-farm payrolls data comes in stronger than anticipated.
Local news
South Africa’s manufacturing production data for Nov came in at a disappointing 0.3%, down from the prior 1.7%, which is indicative of sluggish growth in the sector. Better news for the Rand is news that Chinese trade data for Dec shows growth at a 5 month high of 8.3%. This is encouraging data as China is a key trade partner to SA, although it is too early to speculate if this is sustainable or not.
International news
The upbeat USD has kept EM currencies under pressure this week, and should the US non-farm payrolls also come in stronger than expected it will be fair to expect the dollar positive trading to continue into next week, which will see the Rand weaken further.
TODAYS KEY DATA POINTS (GMT):
• 09:30 GB Industrial production y/y
• 09:30 GB Manufacturing production y/y
• 13:30 US Change in nonfarm payrolls
• 13:30 US Unemployment rate
• 13:45 US Fed’s Lacker speaks on the economic outlook
• 15:00 US Wholesale sales m/m
• 15:00 US Wholesale inventories m/m
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ZAR outlook
USD/ZAR expected range: 10.7300 – 10.8800
EM currencies have been under considerable pressure this week as the USD has been enjoying a period of strong positive momentum. The ZAR touched a new 5-year low against the USD yesterday, at R10.8330/USD, although this morning has firmed up slightly, but may face renewed pressure later if US non-farm payrolls data comes in stronger than anticipated.
Local news
South Africa’s manufacturing production data for Nov came in at a disappointing 0.3%, down from the prior 1.7%, which is indicative of sluggish growth in the sector. Better news for the Rand is news that Chinese trade data for Dec shows growth at a 5 month high of 8.3%. This is encouraging data as China is a key trade partner to SA, although it is too early to speculate if this is sustainable or not.
International news
The upbeat USD has kept EM currencies under pressure this week, and should the US non-farm payrolls also come in stronger than expected it will be fair to expect the dollar positive trading to continue into next week, which will see the Rand weaken further.
TODAYS KEY DATA POINTS (GMT):
• 09:30 GB Industrial production y/y
• 09:30 GB Manufacturing production y/y
• 13:30 US Change in nonfarm payrolls
• 13:30 US Unemployment rate
• 13:45 US Fed’s Lacker speaks on the economic outlook
• 15:00 US Wholesale sales m/m
• 15:00 US Wholesale inventories m/m
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Thursday 9 January 2014
ZAR on the back foot against strong USD
Trade report 09/01/2014
ZAR outlook
USD/ZAR expected range: 10.6900 – 10.8400
US jobs data came in stronger than expected yesterday boosting the USD against most of the major currencies and forcing the ZAR to a fresh 5-year low. The ZAR recovered modestly this morning but this may be short-lived should manufacturing data disappoint. It hit a low yesterday of R10.7925 but this morning had recovered by 0.4% by 06:51GMT to R10.7400/USD.
Local news
Comments by SARB Governor Marcus yesterday mentioned that global growth for the year ahead has improved, a factor which has previously helped back the SARBs decisions to keep interest rates low. However this does not improve the widening current account and budget deficits, one of the main reasons for the ZARs under-performance compared to other EM currencies.
International news
Minutes from the most recent FOMC meeting were released yesterday and revealed the Feds general dovish approach towards QE tapering and that a steady slowdown is not a foregone conclusion. This may allow for the riskier EM currencies to recover slightly as the year progresses. Investors will now be waiting for the initial jobless claims data due out today ahead of the key US payrolls data tomorrow.
TODAYS KEY DATA POINTS (GMT):
• 09:30 SA SACCI business confidence
• 11:00 SA Manufacturing production n.s.a y/y
• 10:00 EZ Consumer Confidence (final)
• 11:00 DE Industrial production wda y/y
• 12:00 GB BoE rate decision
• 12:45 EZ ECB rate announcement
• 13:30 US Initial jobless claims
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ZAR outlook
USD/ZAR expected range: 10.6900 – 10.8400
US jobs data came in stronger than expected yesterday boosting the USD against most of the major currencies and forcing the ZAR to a fresh 5-year low. The ZAR recovered modestly this morning but this may be short-lived should manufacturing data disappoint. It hit a low yesterday of R10.7925 but this morning had recovered by 0.4% by 06:51GMT to R10.7400/USD.
Local news
Comments by SARB Governor Marcus yesterday mentioned that global growth for the year ahead has improved, a factor which has previously helped back the SARBs decisions to keep interest rates low. However this does not improve the widening current account and budget deficits, one of the main reasons for the ZARs under-performance compared to other EM currencies.
International news
Minutes from the most recent FOMC meeting were released yesterday and revealed the Feds general dovish approach towards QE tapering and that a steady slowdown is not a foregone conclusion. This may allow for the riskier EM currencies to recover slightly as the year progresses. Investors will now be waiting for the initial jobless claims data due out today ahead of the key US payrolls data tomorrow.
TODAYS KEY DATA POINTS (GMT):
• 09:30 SA SACCI business confidence
• 11:00 SA Manufacturing production n.s.a y/y
• 10:00 EZ Consumer Confidence (final)
• 11:00 DE Industrial production wda y/y
• 12:00 GB BoE rate decision
• 12:45 EZ ECB rate announcement
• 13:30 US Initial jobless claims
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Wednesday 8 January 2014
Reserves data helps ZAR firm up slightly
Trade report 08/01/2014
ZAR outlook
USD/ZAR expected range: 10.5300 – 10.7100
After the past few volatile weeks and then falling to a 5 year low earlier in the week of R10.7360/USD, the Rand has managed to steady slightly after the news that local foreign exchange reserves data came in stronger than expected. At 07:03GMT this morning the ZAR was at R10.6250/USD, 0.2% up from its overnight close in New York.
Local news
Reserve bank data released this morning has revealed that South Africa’s net gold and foreign exchange reserves have risen to $45.479bn in December from $45.43bn in November. Gross reserves have also increased to $49.587bn in December from $49.348bn in November. This data has helped the ZAR steady out slightly against the USD today, but unfortunately the gaping current account deficit continues to discourage investors.
International news
The US trade deficit declined to a 4 year low in November which has many financial institutions expecting a stronger than initially expected Q4 GDP print. This in turn has had some banks revise their growth forecasts upwards which has helped the USD strengthen. Investors will now be keenly awaiting the release of the FOMC minutes from the final meeting of 2013 which may shed light on the much speculated upon, reduction in Fed stimulus over the year ahead.
TODAYS KEY DATA POINTS (GMT):
• 06:00 SA Net reserves (USD)
• 07:00 DE Current account (EUR)
• 10:00 EZ Retail sales y/y
• 10:00 EZ Unemployment rate
• 11:00 DE Factory orders y/y
• 13:15 US ADP employment change
• 19:00 US Fed releases 17-18 Dec FOMC minutes
• 20:00 US Consumer credit
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ZAR outlook
USD/ZAR expected range: 10.5300 – 10.7100
After the past few volatile weeks and then falling to a 5 year low earlier in the week of R10.7360/USD, the Rand has managed to steady slightly after the news that local foreign exchange reserves data came in stronger than expected. At 07:03GMT this morning the ZAR was at R10.6250/USD, 0.2% up from its overnight close in New York.
Local news
Reserve bank data released this morning has revealed that South Africa’s net gold and foreign exchange reserves have risen to $45.479bn in December from $45.43bn in November. Gross reserves have also increased to $49.587bn in December from $49.348bn in November. This data has helped the ZAR steady out slightly against the USD today, but unfortunately the gaping current account deficit continues to discourage investors.
International news
The US trade deficit declined to a 4 year low in November which has many financial institutions expecting a stronger than initially expected Q4 GDP print. This in turn has had some banks revise their growth forecasts upwards which has helped the USD strengthen. Investors will now be keenly awaiting the release of the FOMC minutes from the final meeting of 2013 which may shed light on the much speculated upon, reduction in Fed stimulus over the year ahead.
TODAYS KEY DATA POINTS (GMT):
• 06:00 SA Net reserves (USD)
• 07:00 DE Current account (EUR)
• 10:00 EZ Retail sales y/y
• 10:00 EZ Unemployment rate
• 11:00 DE Factory orders y/y
• 13:15 US ADP employment change
• 19:00 US Fed releases 17-18 Dec FOMC minutes
• 20:00 US Consumer credit
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