Good morning,

On the wires…

·       SA’s fuel import bill surges to highest level since 1994

·       Kenya confirms its first Ebola death as outbreak spreads

·       Hundreds arrested in French school protests as Macron summons ministers

·       Department of Basic Education misses 2025 target for matric maths, science passes above 60%

·       Tennis world No.1 Sinner’s season over due to knee injury

·       Lionel Messi: ‘The Flea’, rightful heir to Maradona, hangs up Argentina boots

Quote of the day

“It is better to have a bad method than to have none.” — Charles de Gaulle

The indicators

Currency crackdown…

The rand showed a lot of resilience in yesterday’s session despite a firmer US dollar. The rand strengthened from R16.65/$ throughout the day until 14:00, reaching an intraday low of R16.47/$. The rattler then cooled off for the rest of the session, to close firmer than the open at R16.52/$. This was an impressive showing, considering precious metals dropped and the oil price remained elevated above the $100/barrel level.

However, despite the rand managing to fight the greenback in yesterday’s session, the Us dollar has already recouped some of its losses. The dollar index has made decent gains as all eyes are on this evening’s FOMC meeting minutes, which will provide insight into potential rate hikes by the FED for the rest of the year. The minutes will be from the September meeting, where Fed policymakers decided to raise interest rates. Expectations for a hike in next month’s meeting have decreased to 20.5% (down from 51% last week), with an 84% chance of a hike in December’s meeting. The release of last months meeting will give the markets further clues as to the Feds stance on next months hike and could dictate the movement of the US dollar overnight. More interest rate hikes for the US spells bad news for commodities like precious metals, and emerging market economies like SA. Investors would rather earn a higher yield on their cash.

Asian markets were weaker as investor confidence is down. The rand has tended to perform better when Asian markets have, so any knock on them can carry a knock onto us. On the other hand, US equity markets are flying. Both the S&P500 and Nasdaq hit all-time highs in yesterday’s session. Oil remains above $100/barrel and gold weakened slightly. Fresh attacks by the Houthi’s in the Middle East have kept the oil price high. Concerns over the movement of oil remain high and keep the price per barrel above the terrible $100 level.

For today’s session, keep an eye on the price of oil and any headlines out of the ME. The FOMC meeting minutes will almost certainly lead the markets to react this evening.  The rand has been steady and robust within its range recently, it will need to weather the storms (FOMC minutes and ME oil movement) for the rest of the week too.

On the radar…

·       ZAR –ALL – Iran/ US peace attempts

·       USD – President Trump speaks

·       USD – Crude oil inventories

·       USD – FOMC meeting minutes

Did you know?

The Vaal Dam is South Africa’s second largest dam by area and fourth largest by volume.