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Daily Dose

Daily Dose

Good Morning,

On the wires…

  • Russian oil could be hit with price cap as G7 aims to cut off Moscow’s ability to fund its war machine
  • NATO to boost rapid-response unit from 40,000 to over 300,000 troops in apparent response to Putin’s war
  • Four dead, hundreds hurt as stands collapse in Colombia bullring
  • Cyclist killed during high speed chase by alleged hijackers fleeing fatal shootout
  • West Indies sweep Bangladesh with 10-wicket rout in second Test
  • NZ-born Aki to lead Ireland against Maori All Blacks

Quote of the day…

“Most of the important things in the world have been accomplished by people who have kept on trying when there seemed to be no hope at all.” — Dale Carnegie

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: 15.8250/15.8350

Range yesterday: 15.7600-15.9300 and NY close: 15.8650

Unless you are in equities or more specifically, Naspers/Prosus, markets have been a general bore recently. The biggest excitement in our lives seems to be the convergence of what is becoming a mandated WFO for many of SA’s corporate work base (versus the much loved WFH) and stage 4 load-shedding. Trying to navigate ones journey through the maze of potholes, non-functioning traffic lights (power related), non-functioning traffic lights (copper theft related), broken down cars (disposable income shortages) and “oblivious” taxis is quite a shock to the system after a healthier and safer existence in one’s study/bedroom/patio. One does realise quite quickly though that covid has also left an indelible stamp on SA’s society where the word “consideration” seems to have been erased completely from all 11 official language dictionaries. Talk about running the gauntlet. Some people choose to watch a bullfight but for others the need for adrenaline via a long USDZAR position is comfortably taken care of on the journey to the office.

That really is the essence of an FX trader in SA at the moment. The Rand was in the 15.85-16.15 range for a while and only managed to breach the downside via some better than expected US economic data on Friday afternoon, hitting a low of 15.77 (yesterday’s low too). This despite some rather robust equity markets, boosted by stronger tech stocks. The correlation between the price of energy and high interest rates versus the fears of recession (some US data tomorrow on GDP) is still causing confusion in markets and I guess this is the main reason for the lack of clear direction. Not many people are sure of whether the world will swim against the tide, or get washed out by a rip current, into the waiting jaws of………well Jaws!

The Rand is therefore very much reacting to flow direction and it’s no secret which way that has been. SA trade balance data is due this week Thursday and a surplus is guaranteed. We still continue to see a surplus of supply on a daily basis from the domestic sector. It will take a complete change in global trajectory for this to change and for the Rand to head above 16.3500 again. There is still potential for this to happen of course, should the world fall deeper into a recessionary cycle and there is technical evidence to support this, but only if we break above that resistance level. Currently however we have had a double top on the longer term charts followed by a lower high, so those odds have narrowed considerably.

No pearls of wisdom still, other than to suggest continuing to sell into strong rallies, this time with resistance up near 15.9200 but with a smaller position size. Remember the elastic band at all times.

Good luck out there and have a good day ahead.

Support levels – 15.7500, 15.6500, 15.5800, 15.4000

Resistance levels – 15.9200, 16.0500, 16.2000, 16.32/35

On the radar…

  • All – Russia/Ukraine Crisis
  • All – G7 meeting
  • UK – BoE Member Speech
  • US – CB Consumer Confidence
  • EU – ECB’s President Lagarde Speech
  • EU – ECB Members Speaking
  • US – Wholesale Inventories MoM
  • US – Fed Member Speech

Did you know?

When studying or learning something new, pretending you’ll have to teach the material to someone else can help you learn more effectively.

Have a great day and stay warm,

Keaton

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