Good morning,

On the wires…

·       Trump says Denmark to give US ‘permanent control’ over Greenland security

·       Ed Sheeran says Gaza situation ‘unjustifiable’ following controversy

·       Cindy Crawford’s son Presley Gerber dies aged 27

·       SA’s planned crypto curbs may hit deals worth billions

·       ‘Sick culture in every sphere in SA’, says Intercape CEO amid ongoing taxi battle

·       SA’s Formula One deal takes shape as mining titans appoint advisors

Quote of the day

“Train like you’ve never won, compete like you’ve never lost” — Eileen Gu

The indicators

Currency crackdown…

USD/ZAR trades around R16.27 this morning, slightly softer than yesterday’s close but still holding up reasonably well considering the stronger dollar backdrop. The rand has been fairly mixed against EUR and GBP, with EUR/ZAR around R18.65 and GBP/ZAR around R21.76. For now, USD/ZAR seems quite comfortable in the R16.20–R16.30 area, without either side really taking control.

The dollar remains the main sticky point. DXY is sitting around 100.30 and close to its recent highs after the Fed raised rates by 25bps last week, with markets still expecting the possibility of further tightening before year-end. That limits how much love emerging-market currencies are likely to get, particularly while US yields remain elevated. Today is relatively light on major US data, although we do have weekly ADP numbers and a number of Fed speakers which could give the dollar something to work with.

Oil has at least taken some pressure off, with Brent back around $100 after briefly getting close to $110 last week. Despite this, fuel prices are on course for a massive increase in October. These consistently higher fuel prices will generate a sizeable hit to consumer wallets and spending. There is still plenty of headline risk and another proper leg higher would quickly become a big headache for the rand. Gold remains elevated around $4,340/oz, as geopolitical risk just does not seem to want to go away. Despite all of this, the expectation looks to be a 25bps hike tomorrow – In line with America. If we do not hike, the currency is likely to take a hit.

Locally, attention now shifts to the SARB tomorrow afternoon, which adds another layer of uncertainty after the recent oil shock and Fed hike. The saving grace remains that Brent has come off its highs and the rand has handled the stronger dollar reasonably well so far. For today, R16.20 remains the key downside level against the dollar, while we seem to just be tiptoeing around GBP and EUR at the moment.

On the radar…

·       ALL – Trump/ Xi summit

·       ZAR – Interest rate decision (Wednesday)

·       ZAR – Heritage Day (Thursday)

·       ZAR – Leading Indicators

·       EUR – Consumer Confidence

·       All – US-Iran War

Did you know?

Mars is not round like other rocky planets; it is shaped like a rugby ball.