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Daily Dose

Daily Dose

Good Morning,

On the wires…

  • EU parliament speaker David Sassoli has died
  • Taliban takeover: Afghanistan needs $5bn in aid to avoid humanitarian crisis, UN says
  • Russia, US make no breakthrough on Ukraine but agree to keep talking
  • Matric results could only be published with pupils’ consent – legal experts
  • Mantashe on Shell’s Wild Coast exploration: Potential impacts have ‘low significance’
  • Will Bulls’ tighthead squeeze see hyped Wessels continue his positional merry-go-round?

Quote of the day…

“He who has a why to live for, can bear almost any how.” ― Friedrich Nietzsche

The indicators…

Currency crackdown

The rand is trading at best level since mid-December this morning (15.50/$), boosted by comments from US Fed Chair Jerome Powell that hinted that the central bank may take a less aggressive approach to easing its monetary policy than initially expected. The comments came during Powell’s renomination hearing and stressed that while he was prepared to raise interest rates to combat inflation, the timing will be dependant on economic factors. He also said that he and his colleagues were still debating different approaches to reducing the Fed’s balance sheet and that it may take three or four meeting for them to come to a decision – in short, don’t expect a sudden withdrawal of funds from financial markets in the near-term.

In the meantime, focus will shift to US inflation figures due late today that are expected to show a 40-year high, 7% year-on year increase. A figure substantially higher than that may force the Fed to accelerate its rate hiking plans, while a lower reading should give the Fed and markets more breathing room to plot a way forward. Either way the release could have a big impact on currency markets today so caution should be exercised. Markets are currently pricing in an 85% chance we’ll see a rate hike by March and at least three 25 basis-point hikes by the end of the year.

Elsewhere, global stocks and commodities climbed in response to Powell’s testimony, while US Treasuries steadied after rallying at the beginning of the year. In currencies, the dollar was mostly weaker against its major peers – only stabilising against the Japanese yen – as it traded to a 2022 low against the euro. The pound surged to a two-month high, with investors anticipating that the UK will overcome the Omicron variant and have priced in an 80% chance of a Bank of England rate hike in February.

On the radar…

  • All – Omicron updates
  • EU – Industrial Production
  • US – CPI
  • UK – BoE MPC Member Cunliffe Speaks
  • US – Crude Oil Inventories
  • EU – ECB Member Enria Speaks

Did you know?

In 2000, North Korean leader Kim Jong-il claimed to have invented the hamburger.

Have a great day,

Nyiko

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