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Daily Dose

Daily Dose

Good Morning,

On the wires…

  • Portugal reports more than 1 000 heat-related deaths
  • China warns of ‘forceful measures’ if US House Speaker Pelosi visits Taiwan
  • Europe’s mightiest river drying up amid record heatwave, causing shipping issues, deepening energy woes
  • Eskom denies discouraging the switch to solar with possible R900 per month tariff
  • Robbers steal guns, money during cash-in-transit heist in Soweto
  • SA’s ODI magician Rassie hails ‘special day’ after stunning world champions England

Quote of the day…

“Today’s mighty oak is just yesterday’s nut, which held its ground” – David Icke

The indicators…

Currency crackdown…

FXOne would like to thank Dave Gracey from Investec for his contribution to the crackdown this morning.

  • Some thoughts on why the Rand is struggling to make any significant gains, even as the USD has given up about 2.7% over the last few sessions.
    • Developed markets Central Banks are increasing their forecasts for rate hikes. The ECB has moved from a 25pip hike this week to potentially pulling the trigger on a 50-point move.
    • The FED’s trajectory has moved from a probable 75 pip to a possible 100pip move.
    • The SARB will have to decide between 50pips or 75 pips , but they will be conscious of growth.
  • And then we have a litany of domestic factors that are affecting the currency in a negative manner.
  • Load shedding – although the situation has improved a little, it seems that we are now in a situation where stage 2 will become the new standard. This has continued implications for growth etc.
  • The President remains under pressure and there are concerns that the PhalaPhala scandal will have implications for his future.
  • The ratings agencies have focused their attention on the municipal situation, threatening downgrades as many municipalities do not have the necessary funding for infrastructure development.
  • The bond market is trading terribly, with yields trailing ever higher on lack of foreign demand, inflation fears and the domestic fiscal situation.
  • And then of course commodity exports have slowed on the back of falling prices and declining demand from China.
  • I don’t like the way that the ZAR is trading ….yesterday was an ideal opportunity for the ZAR to make up some lost ground.
  •  Equities rallied some 2%, the dollar weakened by 1%, which ordinarily would have been supportive for ZAR, and for a few minutes it did try, briefly trading below 17.00 to the USD, however it was a poor close and the ZAR actually weakened on the day.
  • It has an ominous feel about it.

Good luck.

On the radar…

  • All – Russia/Ukraine Crisis
  • SA – CPI
  • SA – Core CPI
  • EU – ECB Interest Rate Decision Tomorrow
  • EU – Current Account
  • EU – Consumer Confidence
  • UK – House Price Index
  • US – Existing Home Sales

Did you know?

If California were its own country, it would be the fifth wealthiest country in the world

All the best,

Kyle

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