Daily Commentary – 23 October 2018

Merchant West Financial Services Company

Contact Merchant West Capital Markets on: (+2711) 305-9500 or treasury@merchantwest.co.za

USD / ZAR 14.4009 - EUR / ZAR 16.4975 - GBP / ZAR 18.6650 -

Economic Events:

23 October: EC Consumer Confidence

24 October: EC Manufacturing PMI - SA CPI and MTBPS - US Mortgage Application and Manufacturing PMI

25 October: SA PPI - US Advanced Goods Trade Balance and Initial Jobless Claims

26 October: US GDP and University of Michigan Sentiment

Market Commentary:

The rand opened the session softer to the dollar at 14.32, it was 1% firmer against major global currencies on Monday afternoon, amid some improvement in investor sentiment globally, but ahead of risk events this week. At 3pm the rand was at R14.2818 to the dollar from R14.4488, at R16.3974 to the euro from R16.6421, and at R18.5181 from the pound to R18.8934.

Global risk assets were given a shot in the arm earlier, after the Chinese government announced a wide-ranging stimulus package. Concern that global growth is slowing has taken the edge off investor appetite in recent weeks.

Local markets are still expected to see cautious trading in the earlier part of the week, ahead of the medium-term budget policy statement (MTBPS) on Wednesday. Numerous local and international issues continue to hover in the background.

A gloomy statement from finance minister Tito Mboweni is expected which might cause some weakness in the rand weakness and losses on the JSE. On the upside due to some dollar weakness we could see a fight back from the rand and testing the 14.20 level.

The European Central Bank meets this week to discuss monetary policy. Political risks to the common currency continue, including fights over the Italian budget deficit and unresolved Brexit negotiations.

Locally, consumer inflation data on Wednesday, and producer inflation data on Thursday will give some indication of how much a weaker rand and higher fuel costs are pushing up prices. (Business Live)

Range for the day: 14:2000 – 14.4500