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Daily Dose

Daily Dose

G Morning,

On the wires…

  • Putin says it’ll likely be years before the West can cut itself off from Russian oil and natural gas
  • China says it will ‘fight to the very end’ to stop Taiwanese independence
  • Two security guards in custody for allegedly robbing petrol station
  • Bank employee arrested for allegedly stealing over R36 million from dead client
  • Linn Grant makes history as first female winner on European men’s golf tour
  • Verstappen wins F1 in Baku, as Ferrari engines fail

Quote of the day…

“The greatest glory in living lies not in never falling, but in rising every time we fall.“ – Nelson Mandela

The indicators…

Currency crackdown…

FXOne would like to thank Warrick Butler from Standard Bank for his contribution to the crackdown this morning.

Good morning

Current level: 16.0200/16.0300

Range last week: 15.1700-15.9200 and NY Friday close: 15.8600

Talk about a fall from grace reminiscent of Manchester United (and their swathe of glory supporters, now shouting for the blue side of the city), the Rand felt the full force of the stretched elastic band being let go. For the past 3 weeks we have been inundated by questions regarding the Rand’s strength only to be asked the reverse by those same people, the very next day. My carpet cleaning mate included, who no doubt, reversed his long Dollar position in his Robinhood trading account on Thursday morning. I guess therein lies half the problem. The exporters and consistent grind lower, gives one a false sense of comfort and the unravelling is so quick that you hardly have time to wipe the gunk from your eyes. The Rand took 5 weeks to move 80 cents lower and only 2 days to give it all back. The Rattler, Currency Cocaine: call it what you want, but it is a beast of a product to trade most of the time.  Small wonder that most banks have resorted to switching their Rand platform onto a server to be managed by a machine. Most of the old Rand traders are playing solitaire in a psycho ward or swatting away flies at the funny farm. This writer is a bus ride away too.

The thing is, I think we all kind of knew it was coming, hence the many repeated questions about its strength during May and early June. The world was struggling with inflation, war, supply and lack of interest and yet the Rattler ignored it all as a result of consistent mining supply (great GDP and terms of trade as mentioned a few times). The domestic picture was never an issue, even with Mr Ramaphosa’s game farm gamble, and it was always going to be a global catalyst that was going to coerce the reptile from its hibernation. The US CPI on Friday really made people sit up and realise that The Fed may be wrong in its assessment of the US economy and therefore the plans required to tackle said issues. Hiking rates at Corvette pace in a Pinto economy is not going to help growth one little bit, especially when a lot of that has been false growth borne of all the helicopter money they issued to willingly since 2008 and upped the ante in 2020. Like Zimbabwe, they are surely going to find out how difficult it is to stop the printing presses once they have been started, but that is a story for another day.

The Rand has touched back above 16.00 at the time of writing as the Asian markets react to the sell-off in US equity futures (probably the best technical trade this year so far). The S&P back down at 3,500 is no laughing matter and its destiny seems guaranteed (please don’t trade this on my view). We could see a move back to 16.32/35 before you can say Cold Front, although I do believe we have seen too much panic, a little too quickly. Not to say I am going to enter a short USD position here either. Caution is the buzz word at the moment, and I am going to err on the side on sanity and look to buy any dips below 15.90 today.

Good luck out there and have a great week ahead

Support levels – 15.8500, 15.7200, 15.5800, 15.4000

Resistance levels –16.0500, 16.2000, 16.32/35, 16.5000

On the radar…

  • All – Russia/Ukraine Crisis
  • SA – Business Confidence
  • US – Fed Member Brainard Speaks
  • US – FOMC on Wednesday
  • UK – Rate Decision on Thursday

Did you know?

There are no muscles in your fingers: Their function is controlled by muscles in your palms and arms.

Have a lovely week,

Wayne 

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