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Daily Dose

Daily Dose

Good Morning,

On the wires…

  • Sri Lanka’s president is stuck in his own country after airport staff blocked him from fleeing
  • Ukraine rocket strike kills 52 Russian troops, as fighting continues in south
  • Eight candidates have been nominated to succeed Boris Johnson
  • Payment starts for new R350 grant – but nearly half of applicants didn’t qualify
  • Limpopo man dies after consuming entire bottle of Jägermeister
  • 2023 Australia-SA ODI series cancelled as Proteas forfeit Super League points

Quote of the day…

“Don’t watch the clock; do what it does. Keep going.” — Sam Levenson

The indicators…

Currency crackdown…

The rand experienced somewhat of a recovery late yesterday, managing to trade back below the R17 mark after reaching a high of R17.19 against the dollar during our trading session. The currency has managed to hold on to those gains this morning and it’s a similar story with the EUR/ZAR and GBP/ZAR pairings, which have both opened around 10 cents lower than they did yesterday.

Big news came yesterday in the form of EUR/USD parity, as euro was briefly valued at 1:1 to the dollar for the first time in two decades. This slide to parity has been brought about by a variety of issues – a differing inflation approach between the ECB and the Fed, out-of-control energy prices and threat of major recession in Europe – all layered with general geopolitical uncertainty. That being said, the dollar’s remarkable run has pushed it deep into overbought territory. While this would usually spark a pullback and trigger a squeeze on dollar bulls, the dollar seems to be being well supported by the Fed’s unwavering hawkishness in these unprecedented times.

US inflation data being released at 2:30PM will almost definitely disrupt the market. A higher-than-forecast CPI will reinforce bets on continued US rate hikes, and subsequently support the dollar even further…could we even see the dollar overtake the euro? A lower-than-expected inflation would ease recession concerns and most likely provide some respite to emerging market currencies like our own. We also have South African retail sales data to come later, giving us an indication of our own economic status quo. A higher-than-expected reading would be a bullish for the ZAR.

The commodity market is also undoubtedly wary of US inflation later, oil positions were sold yesterday due to concerns that aggressive interest rate hikes will spur an economic downturn and hurt oil demand. Prices fell by more than 7% yesterday during a choppy trading session. Benchmark U.S. 10-year Treasury yields rose yesterday – denting the demand for non-yielding gold. Stock markets have opened relatively flat across the board, all seemingly in anticipation of the US inflation report this afternoon.

On the radar…

  • All – Russia/Ukraine Crisis
  • ZA – Retail Sales
  • US – IEA Monthly Report
  • US – Core CPI
  • US – Federal Budget Balance
  • EU – EU Economic Forecasts
  • EU – Industrial Production
  • EU – ECB’s McCaul Speaks

Did you know?

Your nose is always in your field of vision, but your brain ignores it

All the best,

Kyle

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