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Daily Dose

Daily Dose

G Morning,

On the wires…

  • India suffers worst power crisis in years
  • Finland loses main gas supply after refusing payment in Rubles
  • Rainfall expected to ease in parts of KwaZulu-Natal after heavy downpours and flooding
  • Stage 2 load shedding to continue every evening this week
  • Man City produce dramatic late comeback to retain Premier League title
  • Justin Thomas launches record final-day comeback to seal PGA victory in playoff drama

Quote of the day…

“The best way to predict the future is to invent it.” – Alan Kay

The indicators…

Currency crackdown…

FXOne would like to thank Wayne Rosenberg for his contribution to the crackdown this morning.

The rand is enjoying some strength against the $ but has lost small ground against the other majors. This, as the $ eventually relinquishes its grip on global currency markets. There is a mixed bag of news, and it seems as if the markets are looking for the next big clue. Inflation, global growth concerns, China Covid policy and Ukraine are all in the mix. The fragility of international equity markets has also entered the fray, alongside the use of words of recession and stagflation. At the moment, all eyes are watching international equity market prices, obviously led by the US. Extended valuations and higher interest rates are also weighing on prices, but global growth concerns and the ability of corporates to perform to investor expectations, have added to the misery.

The rand has clawed back some decent ground against the $ and this was assisted by some rare, good news in the announcement by S and P, that they were affirming SA’s credit rating at BB, but changing the outlook from stable to positive. Main reasons were the trade surplus, improving fiscus and a revision of the debt/ GDP ratio. Further flooding in KZN and sabotage reports at Eskom remain a concern. It feels like the rand is walking uphill, looking into the sun, although we are over 50c lower than this time last week!

Indicators: US equity markets were mixed but neutral on Friday. The futures prices do indicate a higher opening which should ally equity market nervousness. Asia is mixed. US 10-year yields are slightly higher but still comfortably below the 3.0% level. The SA R2030 yield is lower, in synch with the stronger rand. Gold and most metals markets are higher which is supportive. Bitcoin hovers just above the $30 000 level, even after Christine Lagarde (ECB president) said crypto currencies are “based on nothing” and should be regulated to steer people away from speculating on them with their life savings.

For the GBP users, I picked this up in an Investec report (source CNBC)- Traders are increasingly taking short positions against the British pound as the U.K.’s cost of living crisis begins to bite. Bank of England Governor Andrew Bailey has warned of an “apocalyptic” outlook for consumers as a recent survey also showed that a quarter of Britons have resorted to skipping meals. According to the most recent Commodity Futures Trading Commission data on May 10, asset managers and institutional investors held more than 128,000 short positions against the pound, against just 32,000 long positions. CNBC. WR- not great when using words like “apocalyptic”, but remember if we do see any GBP strength, we might encounter short squeeze which might cause a rapid and hard snapback.

Markets look like they are looking for fresh direction, trade the ranges.

On the radar…

  • All – Russia/Ukraine Crisis
  • All – Covid 5th Wave
  • UK – BoE Governor Bailey Speaks
  • EU – Eurogroup Meetings

Did you know?

Mount Everest is the only place in the world where the land ever touches the stratosphere.

Have a lovely week,

Wayne

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