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Daily Dose

Daily Dose

Good Morning,

On the wires…

  • France to cull over 1 million poultry to fight bird flu
  • Anti-vax Czech singer died after she intentionally caught Covid in attempt to get a health pass
  • MP who quit Boris Johnson’s Conservatives confirms he was ‘threatened’ amid intimidation allegations
  • SA to get $750 million World Bank loan to boost economic recovery
  • Matric Results: ‘Absolutely delighted’ – All smiles as Western Cape bounces back to 80% pass rate
  • Jota double fires Liverpool into League Cup final

Fun Friday…

The indicators…

Currency crackdown

The rand continued its remarkable rally yesterday, that has now seen it gain over 30c against the US dollar in just the last two days. The moves have been largely driven by strong expectations that the SARB will raise rates by 25 basis-points at its meeting next week after higher than expected CPI figures earlier this week. The hike is expected to be followed by a series of additional hikes throughout the year that should keep the SARB in touch with the US Fed’s hiking cycle. Meanwhile, also supporting the currency were rising precious metal prices and lower US Treasury yields that slowed the dollar down.

Surprisingly, the rand has managed to hold firm near its best levels in over two-months at around15.20/$, despite global equity markets effectively in risk-off mode. Asian shares and US stock futures recorded significant drops this morning after tracking losses in the US overnight, as lingering concerns over the Fed’s tightening and weaker-than-expected economic and earnings data weighed on sentiment ahead of the Fed’s meeting next week. Also weighing on market sentiment were comments from US Treasury Secretary Janet Yellen that she was confident that the Fed and the Biden administration would take whatever steps are necessary to bring down inflation over the course of the year as long Covid-19 gets under control. The way we see it, the biggest risks to the currency at the moment are the Fed becoming a lot more hawkish than expected, the SARB hiking less than the market anticipates and the potential for another covid outbreak.

In the currency market, the dollar fell to a one-week low against the Japanese yen, with the yen benefitting from safe-haven buying amid fears of rising inflation and the potential for aggressive Fed hikes. The dollar recorded gains against the pound and euro and is on track for it best weekly gain in nearly two-months against its major peers. In commodities, oil prices dropped after trading to a seven-year high earlier this week, with an increase in US crude and stockpiles weighing, while gold is trading higher.

On the radar…

  • All – World Economic Forum (Davos)
  • UK – Retail Sales MoM & YoY
  • All – Ukraine threat
  • EU – ECB President Lagarde Speech

Did you know?

Eminem was the first artist in history to have 10 consecutive albums debut at number one on the Billboard 200 chart.

Have a great day and an amazing weekend,

FXOne Team

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