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Daily Dose

Daily Dose

G Morning,

On the wires…

  • China turns Winter Olympics villages into quarantine camps to stamp out new Covid-19 outbreaks
  • The US will now most likely fall into a recession this year, say economists
  • COP26 president to visit SA to reinforce support for just energy transition
  • Nelson Mandela Bay Day Zero: Another dam set to run dry as levels sit at 8%
  • England’s Fitzpatrick wins US Open with sensational finish, SA’s Daffue tied for 31st
  • Verstappen holds off Sainz for the win in Canada, celebrating 150th F1 race in style

Quote of the day…

“Failure is the condiment that gives success its flavour.” – Truman Capote

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: 15.9850/15.9950

Range last week: 15.7200-16.1850 and NY Friday close: 16.0250

To give you an idea of the state of flux the market is in currently, the opening level above in the Rand is exactly what is was when I last wrote the commentary last Wednesday before the SA long weekend. In between it’s been fun and games after the Fed hiked by 75bps on that same evening. Old news indeed. The only things that seem to have moved are equities, bonds and of the course the old favourite, crypto…..or maybe not so favourite given the recent trajectory. Must be loads of equity and 401K liquidation in order to cover the margin calls from BitFinance, LUNO et al. Cheap profits, expensive losses. The Rand remains non-plussed.

All eyes will be on the SARB going forward now to see if they are going to follow a similar path to the Fed to try and reign in soaring inflation, although maybe not soaring in SA as opposed to hovering like the Good Year blimp. That really should change once the sharp increases in the fuel price filter into the economy. We shall see on Wednesday, with market expectations of a move above the SARB mandate band of 3%-6%. Overall, I think the market is going to be increasingly focused on the data points that highlight the global economic status so see how rising interest rates are impacting on growth. One eye on China and the war in Ukraine of course.

For now, though the Rand seems to have ridden the tide fairly well, thanks to some rather solid supply from exporters above 16.00. They definitely seem to have contained the greed emotion really well. So, with flows still predominantly one-sided from a domestic perspective, it’s down to the offshore forces to see if they are still in risk on or off mode. That will determine if we eventually see a break above 16.32/35 or not. For now, I remain neutral.

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
  • US – Fed Member Bullard Speaks
  • EU – ECB Members Speak
  • US- bank holiday
  • UK – MPC Member Haskel Speaks
  • UK – BoE MPC Member Mann Speaks

Did you know?

In Germany, first aid training is mandatory for getting a driver’s license to ensure that drivers can assist in the event of an accident

Have a champion week,

Wayne

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