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Daily Dose

Daily Dose

G Morning,

On the wires…

  • Sweden and Finland advance to final stage of joining NATO in response to Russia invading Ukraine
  • Bankrupt Sri Lanka, which said it has less than a day of fuel left looking to buy cheap Russian oil
  • Oil and gas workers are on strike in Norway, and it’s escalating Europe’s natural-gas crisis
  • New Eskom deal with unions to add R1 billion to wage bill
  • Wallabies lock banned from last two England Tests after red card
  • Excitement builds around F1’s possible move to SA as Kyalami plots compliancy upgrades

Quote of the day…

“I know for sure that what we dwell on is who we become.” – Oprah Winfrey

The indicators…

Currency crackdown…

Dollar strength is the theme at the moment, relative to the majors but especially relative to our rand – as the dollar continues to bask in safe haven demand. The rand conceded a full 1% just yesterday, making it a 4% depreciation versus the dollar since the beginning of June. The rand dipped to its weakest level against the dollar since 2020 as global investors piled into safer assets – betting on further Fed rate hikes. Our currency isn’t the only one taking a knock, however. The fear of recession still appears to be gaining traction, with the euro falling as low as $1.0261 yesterday. The EUR/USD pairing is now at its lowest level since 2002 – moving ever closer to parity. Eurozone PMI data from June exposed a serious flounder in economic growth, while the ECB is largely expected to implement more modest interest rate increases than the Fed.

The rand held its own at R16.98 to the euro throughout yesterday’s session but buckled overnight to sit around 17.05 this morning. Similarly, the rand made some minor gains against a struggling pound yesterday, gains which were also eroded overnight. We currently sit around 19.91 to the pound, after seeing levels around 19.66 yesterday. The pound itself is also flirting with a two-year low against the dollar.

Stock markets and world oil prices plunged on Tuesday on mounting fears that major economies would slide into recession as inflation soars. The South African Top 40 took a serious knock yesterday, conceding 3.20% in value – it has already regained around a percent this morning though. Europe’s main stock markets shed three percent heading into the close of trading yesterday, while Wall Street indices were down almost 2% in early trading on Tuesday. On the commodity side, gold has sunk to near a 7-month low, while oil dropped almost 8% to a month low of $104 per barrel – despite ongoing supply concerns. That being said, investors have climbed back into the commodity this morning, pushing the price back up to $108.

On the radar…

  • All – Russia/Ukraine Crisis
  • EU – EU Economic Forecasts
  • EU – Retail Sales
  • UK – Construction PMI
  • UK – BoE MPC Member’s Speak
  • US – Fed Member Williams Speaks
  • US – Fed Meeting Minutes
  • US – ISM Non-Manufacturing PMI

Did you know?

Glaciers and ice sheets hold about 69% of the world’s freshwater.

All the best,

Kyle

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