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Daily Dose

Daily Dose

Good Morning,

On the wires…

  • Saudi Arabia and UAE vow to deliver ‘significant increase’ in oil output as world faces supply crunch
  • Elon Musk’s countersuit against Twitter says the company misrepresented itself and misled him
  • Spain is banning air conditioning below 27 degrees in public places to wean off Russian energy
  • Man appears in court on charges of impersonating Bheki Cele on social media
  • 19 people allegedly assaulted by protesting Kagiso residents
  • SA men’s hockey team makes first Commonwealth semi-final since 2002

Fun Friday…

The indicators…

Currency crackdown…

FXOne would like to thank Nyiko Ndlebe for his contribution to the crackdown this morning

The rand made a strong recover yesterday, as the controversy surrounding Nancy’s Pelosi’s visit to Taiwan seemingly fizzling out, with earlier threats of retaliation from China, so far, amounting to very little. The local currency has also been helped by a weaker dollar ahead of this afternoon’s US job report, with the rand breaking through the 16.60/$ level this morning. The job’s report comes at a time when the Fed is looking to economic releases to see if the aggressive pace of previous rate hikes are starting to slow growth, which will be key in dictating its approach to future hikes.

Nonfarm payrolls are expected to increase by 250,000 jobs last month, which is a substantial drop from the 372,000 recorded in June. This is expected to be the 19th straight month of increases, however it will be the smallest one recorded in that period, indicating that the labour market may be cooling. A slowdown in job growth could also ease pressure on the Fed to deliver another 75 basis-point hike at its next meeting in September. The price action this morning seems to indicate that traders think we’ll see a smaller interest rate increase, with futures markets only pricing in a 37.5% chance of a 75 basis point hike – 62.5% for 50 basis-points.

Meanwhile, the spread between the 2-year and 10-year on the US Treasury yield curve reached 39.2 basis points overnight, which is the deepest inversion since 2000 – another indicator of a potential recession and follows two consecutive quarters of negative growth in the US. Another sign of slowing growth were oil prices closing at their lowest levels since February, before the Russia invaded Ukraine, on concerns that a global economic slowdown will severely hit demand. In the UK, the Bank of England followed its 50 basis-point rate hike with a warning that the fourth quarter of this year could be the start of a long-lasting recession.

On the radar…

  • IT – Industrial Production MoM & YoY
  • CA – Unemployment Rate
  • US – Non Farm Payrolls
  • US – Fed Barken Speech
  • US – Unemployment Rate
  • US – Average Hourly Earnings MoM & YoY

Did you know?

In 1994, Bill gates bought Leonardo da Vinci’s Codex for $30,802,500 (equivalent to $53,222,898.79 as of 2019). He had the pages digitally scanned and included some of the images as wallpapers for Microsoft Windows for everyone to enjoy.

Have a great day and an even better weekend,

FXOne Team

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