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Daily Dose

Daily Dose

Good Morning,

On the wires…

  • At least 1 000 killed, 2 000 homes destroyed in Afghan quake as rescuers scramble for survivors
  • Russia vows to prosecute Americans captured in Ukraine
  • UK gives SA R3.7m in funding to build skills for electric vehicle jobs
  • Inflation just hit a 5-year high – and worse is to come, warn economists
  • Zondo says banking laws must change to allow clients to be heard before shutting accounts
  • Mick Schumacher still motivated to score maiden F1 point despite Montreal heartbreak

Quote of the day…

“You can’t build a reputation on what you are going to do.”― Henry Ford

The indicators…

Currency crackdown…

The US dollar remained under pressure early this morning as it looked set to extend declines against its major peers to a fourth day. This is mostly a result of Treasury yields wallowing near two-week lows amid rising concerns of a recession. Despite this, the rand has opened weaker against the dollar than it did yesterday, at 15.94 – could we potentially see a sustained push above 16.05? The dollar index has fallen 1.54% from the two-decade peak of 105.79 reached on June 15, when the Fed implemented their biggest rate hike since 1994.

Fed chief Powell said yesterday that the central bank was still fully committed to bringing prices under control even at the risk of an economic downturn. Powell’s hawkish testimony has taken some steam out of the USD, his comments regarding recession risk evidently weighing more than his unconditional commitment to restore price stability. That being said, USD interest rate support should ultimately continue to build.

Similarly to the USD/ZAR pairing, the rand has endured a slight depreciation against the other two majors – losing around 0.20% to the euro and 0.10% to the pound. This weakness comes off the back of South African inflation accelerating to 6.5% in May, from 5.9% last month. This is the highest level since 2017, and still most likely doesn’t yet capture the full inflation effect being experienced here. Still, the breach of the target inflation ceiling (6%) coupled with rand weakness may prompt an aggressive monetary policy move from our Reserve Bank.

Bearing in mind that the rand rides the commodity-price wave, this year’s standout inflation trade of backing commodities is coming under pressure and most probably not helping our currency. Investors remain concerned that recession will curb demand for raw materials, and this has kept the oil market under pressure.

On the radar…

  • All – Russia/Ukraine Crisis
  • EU – ECB Economic Bulletin
  • EU – Manufacturing PMI
  • EU – EU Leaders Summit
  • UK – Manufacturing PMI
  • US – Initial Jobless Claims
  • US – Fed Chair Powell Testifies
  • US – Fed Bank Stress Test Results

Did you know?

If you drive to an airport without having an accident, you’ve already survived the deadliest part of airplane travel.

All the best,


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