Good morning, | |||||||||||||||||||||||||||||||||||||||||||||||||||||
On the wires… | |||||||||||||||||||||||||||||||||||||||||||||||||||||
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Quote of the day | |||||||||||||||||||||||||||||||||||||||||||||||||||||
“People say that money is not the key to happiness, but I always figured if you have enough money, you can have a key made.” — Joan Rivers | |||||||||||||||||||||||||||||||||||||||||||||||||||||
The indicators | |||||||||||||||||||||||||||||||||||||||||||||||||||||
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Currency crackdown… | |||||||||||||||||||||||||||||||||||||||||||||||||||||
The rand gave back some ground against the dollar during yesterday’s session, slowly moving up the 16.50’s. The move was largely dollar-driven, with the rand holding up better against the euro and remaining broadly steady against sterling over the wider trading day. This morning’s early quotes showed some recovery, with USD/ZAR back around R16.50 – Not a lot to write home about.
The dollar remains well supported near its strongest levels in around 18 months, despite easing slightly this morning. Demand for safety and the prospect of further Fed tightening continue to underpin the greenback, with this week’s US inflation release the next major test. Another sticky reading could strengthen the case for further hikes, although markets still favour the Fed holding rates unchanged. For the rand, that leaves limited room for a sustained recovery without some softer US data.
Oil remains a sticky point. Prices climbed yesterday before pulling back this morning as the prospect of additional Russian diesel supplies offered some relief. With that being said, threats to energy infrastructure and shipping in the Middle East continue to keep the market on edge. For South Africa, elevated oil prices alongside a vulnerable rand remain an uncomfortable combination for fuel costs and household spending. Today’s OPEC monthly report will be worth watching for any changes to its supply and demand outlook – I certainly wouldn’t hold my breath just yet though. Those in the energy sector are reaping the rewards and show no sign of stopping.
The IMF offered a modest positive this morning, nudging its global growth forecast for this year higher while leaving next year unchanged. AI-related investment is helping cushion the energy shock, but the benefits are uneven, with energy-importing economies facing a tougher environment. The warning underneath the upgrade is that inflation remains problematic and economies have less room to absorb further disruption. The rand will need more sustained relief from both the dollar and oil before this morning’s improvement develops into a more convincing recovery. Same old.
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On the radar… | |||||||||||||||||||||||||||||||||||||||||||||||||||||
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Did you know? | |||||||||||||||||||||||||||||||||||||||||||||||||||||
The Incan empire had no written language. | |||||||||||||||||||||||||||||||||||||||||||||||||||||
All the best,
Kyle Moulster
