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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