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Daily Dose

Daily Dose

Good Morning,

On the wires…

  • North Korea claims it’s found its first ever case of Covid — activates ‘maximum emergency’ procedure
  • Boris Johnson expected to ‘float’ details of UK’s plan for ditching Northern Ireland protocol
  • KZN floods: United Nations in SA contributes R21m ‘to provide support to affected communities’
  • Buffalo bull kills field ranger at Kruger National Park
  • Mikel Arteta launches scathing attack on referee after Arsenal’s crushing defeat to Spurs
  • Colombia’s Munoz fires 60 to seize PGA Byron Nelson lead

Cartoon of the day…

The indicators…

Currency crackdown…

The rand has come out the blocks with some strength this morning, opening 8 cents lower against the dollar and over 22 cents lower against the euro. This comes off the back of Fed Chair Jerome Powell again pushing back against speculation of steeper interest-rate hikes – reiterating that the Fed is not actively looking to raise rates by 75bps. Perhaps the market initially overvalued interest rate increases in Europe, and we are now seeing a correction? The story may be similar with regards to the dollar, which experienced a slight contraction overnight – indicated by 0.14% drop in the US Dollar Index. Persistent global economic worries seem to still provide the dollar with support, along with U.S. 10-year treasury yields continuing to edge up. Could we even potentially see parity between the EUR/USD pairing at some point in the near future? From a pound perspective, our currency gained 0.32% yesterday and a further 0.42% this morning already, down towards the 19.50 mark.

This rand strength comes despite commodity prices dipping slightly, with gold losing 1.65% throughout yesterday and remaining near a three-month low this morning. Moreover, the rand remains resilient even after news yesterday that South African mining production slid 9.3% on a year-on-year basis. While oil prices did extend gains this morning, they are still headed for their first weekly loss in three weeks as worries about inflation and China’s COVID lockdowns slowing global growth offset concerns about dwindling fuel supplies from Russia. Inflation and aggressive rate rises have driven the U.S. dollar to the 20-year highs which we are seeing, which has capped oil price gains as a stronger dollar makes oil more expensive when purchased in other currencies. That being said, the oil futures market remains in backwardation, with near-term prices trading above longer-dated ones.

Along with the incredibly bearish stock market, the crypto space is taking some serious heat. That being said, Bitcoin regained 7.49% last night after falling to its lowest level in 16 months. The lead crypto retook the $30,000 threshold and will hope to remain there, despite strong risk-off market sentiment.

On the radar…

  • All – Russia/Ukraine Crisis
  • All – Covid 5th Wave
  • US – Fed Member Mester Speaks
  • EU – ECB’S Schnabel
  • EU – Industrial Production
  • SA – Business Confidence

Did you know?

Information can travel between neurons in our brain at 431 km/h.

Happy Friday!

Kyle

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