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Daily Dose

Daily Dose

Good Morning,

On the wires…

  • New Zealand’s borders fully open after long pandemic closure
  • The US is drawing up sanctions against companies that smuggle Iranian oil
  • Four dead, municipal building set alight as Tembisa rocked by protests
  • South Africa suspends chicken tariffs to ease price pressures
  • Coetze and Gallagher claim silver as Team SA finish off stellar day at Commonwealth Games
  • Proteas stalwart Rabada ruled out of Ireland T20 series

Quote of the day…

“More smiling, less worrying. More compassion, less judgment. More blessed, less stressed. More love, less hate.” – Roy T. Bennett

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: 16.5250/16.5350

Range yesterday: 16.4200-16.6700 and NY close: 16.5050

It’s a new month, well it started yesterday, but with a few normalised systems issues, a commentary was only at the back of my mind. On Friday the Rand managed to hit very close to the 16.35 support level with a low of 16.3850. If you managed to take profit on any short positions you probably thought you had done well, considering the close on Friday for the week back near 16.6000. You may even had treated yourself to something gold and cold on a sunny Friday afternoon. All except yesterday we almost saw the same levels trade again as the market juggled for positioning in what is looking like a messy week for FX as we head into this Friday’s US employment data.

With the Fed moving to a position of data dependency versus market guidance on future monetary policy, I expect a reasonable amount of uncertainty and therefore volatility to continue. Our Friday note suggested a messy range and so far this has been the order of the day/s. The tussle between inflation and recession will not be solved quickly. At the same time we have had a really strong correction in most markets, other that EURUSD, which cannot trade higher for love or money. The EU has its own endemic issues though with Italy ever on the cusp of bankruptcy. USDYEN has moved from its peak of 139.38 to an overnight low of 130.41 with 10Y UST’s pushing off its own recent high of 3.49% to an overnight low of 2.52%. Quite a move considering the Fed is still keen to increase the cost of borrowing.

The Rand has itself also recovered from the 17.30 to Friday’s low of 16.3850. So all in all, we have seen a big correction across most markets. Even the world’s equity markets have been given a glimmer of hope with seemingly every energy company reporting record profits and tech maybe surprising a few investors/analysts. One does feel that we have come a long way and I am not sure there are many legs left, certainly because I can’t see the Fed giving up the ghost just yet. We almost know that they happy to look through a short term impact on the economy in favour of longer term price relief. So it is my belief that we will continue to muck about in an ugly pattern until Friday and then we may get a clearer picture of the US economy through the employment and the cost of employment picture.

For now the 16.40 to 16.65 range remains intact and I will be happy to trade this until one side goes.

Good luck out there and have a good ahead.

Support levels – 16.4200, 16.3500, 16.1800, 16.1000, 15.9500

Resistance levels – 16.6500, 16.8000, 16.95/17.00, 17.1000, 17.2000, 17.30/35

On the radar…

  • US – JOLTs Job Openings
  • US – Fed Evans Speech

Did you know?

There’s no antidote for a blue-ringed octopus bite. However, if you can get to a ventilator to help you breathe and wait out the 15 hours of paralysis, your muscles will start working again and you’ll survive.

Have a great day,

Keaton

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