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Daily Dose

Daily Dose

Good Morning,

On the wires…

  • Greece battles fierce wildfires amid heatwave
  • Russia and Ukraine seal landmark grain deal in Istanbul
  • World Health Organisation declares monkeypox a global emergency
  • Three people killed, 16 injured in horrific head-on collision on N2 in Eastern Cape
  • Banyana Banyana win their first Cup of Nations title
  • Max Verstappen wins French GP after Charles Leclerc crashes out while leading

Quote of the day…

“Every man dies, but not every man really lives.” – William Wallace

The indicators…

Currency crackdown…

We are light on economic news today, with all eyes on the US GDP tomorrow and interest rate decision later in the week. The Fed concludes a two-day meeting on Wednesday and markets are poised for a 75-basis-point rate hike, with a small chance of a 100 bp hike. Investors still seem to be supporting the dollar, even in light of a weakening global economy. Data last week showed business activity in the United States contracted for the first time in nearly two years this month, activity in the euro zone retreated for the first time in over a year, and growth in Britain was at a 17-month low. The general slowdown in economic growth has driven traders to pull back on tightening expectations, worried a wobbly economy can only withstand so many rates increases. Still, investors are yet to take the dollar down too far from milestone highs given that the global outlook is so indeterminate.

In Britain specifically, inflation is running riot – whoever takes over as prime minister will inherit a whole host of dilemmas. Volatile energy prices and a tight labour market coupled with higher inflation and a weaker currency really will take some careful economic planning. All of the above has the GBP/USD pairing languishing near levels last seen when the Covid-19 lockdown was in full force. If one looks to the world equity markets as a proxy, the pound has undoubtedly become steadily more sensitive to global risk appetite since then.

The rand itself has shown some resilience relative to the majors however, sitting around 16.85 to the dollar this morning – some 25 cents lower than we opened this time last week. We have also maintained our pullback against the euro, after reaching highs of 17.60 last week, we now trade around R17.18 per euro. The pound is also being held up at 20.20, a far cry from the levels we saw last week.

In other news, Bitcoin’s minor rally lost steam over the weekend and fell 3% – back below its 50-day moving average to $21,851. Oil experienced another drop to $102 per barrel, with oil futures incredibly volatile in the last couple weeks. One would expect stocks and commodities to trade relatively flat this week, in anticipation of US decision-making later in the week.

On the radar…

  • US – Chicago Fed National Activity

Paste here…

Did you know?

French was the official language of England for about 300 years

Have a good week!

Kyle

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