Daily Commentary - 10 May 2018

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

USD / ZAR 12.4341 - EUR / ZAR 14.7605 - GBP / ZAR 16.8448 -

Economic Events:

10 May : CH CPI  - SA Mining Production ; Manufacturing Production - UK BOE rate announcement - US Jobless Claims  ;CPI

11 May : US University of Michigan Sentiment

Market Commentary:

An interesting day in the markets yesterday, in fact this entire week has been quite tricky to call with moments where the Rand was surging ahead, only to bounce and again give the Rand bears more than enough reason to smile again.  Many felt on Monday morning that the Dollar run was over, but if the last few days have taught us anything it is indeed fair too soon to call that just yet, but yes things are looking up for the EM Market currencies and we are starting today off very nicely with the Rand fast approaching the key $/R 12.50 level.

The Rand has been helped along with the gold price firming to close the day a full 5 Dollars stronger than where we opened at 1315.51 and new out of turkey yesterday also help a little to stimulate growth into all EM Market currencies helping us yesterday to test back to 12.5350 late last night before closing around 12.5800.

The SACCI business confidence index fell for a third consecutive month in April to 96.0 from 97.6 in March. Sentiments were weighed down by lower merchandise exports and a weaker currency. However, the index has remained above 95 for six consecutive months. We expect it to trend higher in future as domestic demand starts to pick up.

The North West Provincial Executive Committee announced yesterday that Premier Supra Mahumapelo will not be resigning, but rather taking a leave of absence pending an interministerial investigation into the state of governance in the province. This follows reports that the premier had agreed to resign or face being fired.

Today is a data-packed day. We start with the release of SA mining production at 11:30, then manufacturing output at 13:00. The BoE will announce its monetary policy decision at 13:00, with markets expecting the Bank to keep the policy rate on hold at 0.5%.

U.S. CPI data will be in focus this afternoon – expect some choppy trade as geopolitical risks play out in the background.

Our range for the day : R 12.4000 – R 12.7000