Daily Commentary - 11 December 2018

Merchant West Business Finance

Merchant West Capital Markets

USD/ZAR 14.3745 | EUR/ZAR 16.3411 | GBP/ZAR 18.0710

Please feel free to contact us on the details below:

JHB: (011) 305-9500 | PTA (012) 742-8600 | CPT (021) 552-7007 

email: treasury@merchantwest.co.za

Market Data: 

11 Dec :SA Manufacturing Production| US PPI Data 

12 Dec :SA Retail Sales ; CPI Data | US MBA Mortgage Applications; CPI Data 

13 Dec : SA PPI Data | US Initial Jobless Claims 

14 Dec : US Industrial Production ; Markit Manufacturing PMI 

Market Commentary: 

On a day when no local headlines (yes, not even load-shedding!) drove the domestic market, a steady climb by the U.S. Dollar saw ZAR move all the way to 14.48 in the New York session – taking the 50-day and 100-day moving averages of 14.27 and 14.28 along with it. We eventually closed 1.45% weaker at the 14.39 levels which sees the month-to-date losses of over 4.5% wipe out all of November’s 3.8% gains on a day when we did see some decent demand for USD vs. the Rand. ZAR weakness spilled over to rates as well as bonds with the R186’s currently at the at 9.16% mark. There is some potential for ZAR inflows with the last bond auction of the year to take place today. Next resistance levels will be at 14.50/55 then 14.85 comes into play with a close below 14.20 signalling a rebound to strength.

 

Chinese shares pulled ahead on Tuesday after Beijing confirmed it was still in trade talks with the United States, though overall sentiment remained fragile in Asia as the pound wallowed near 20-month lows on deepening political turmoil over a Brexit deal. Adding to the gloom in markets, British Prime Minister Theresa May abruptly postponed a parliamentary vote on her Brexit agreement on Monday, a move that hit risk assets globally and sent the pound spiralling down to $1.2505. Disappointing data from major economies including China and Japan have also fanned worries about corporate earnings and factory output, with the Sino-U.S. trade battle clouding the outlook for world growth. These uncertainties have put the brakes on equities this year, with MSCI’s broadest index of Asia-Pacific shares outside Japan skidding more than 16 percent after surging 33.5 percent in 2017. “We see a slowdown in global growth and corporate earnings in 2019”.  *

 

Richard Turnill, global chief investment strategist for Blackrock wrote in an outlook report. “The end game is nigh for Brexit. We see odds of a no-deal exit in March as low, but expect a bumpy road ahead. A second referendum is not impossible.” Sterling slumped below important chart support around $1.26 on May’s delayed Brexit vote. With European Union refusing to renegotiate the deal lawmakers doubted her chances of winning big changes. It was last at $1.2581, up 0.2 percent. The dollar fell on the yen to 113.05. Its index against a basket of major currencies slipped 0.1 percent to 97.086. It has jumped 5.5 percent so far this year on safe-haven demand and as the U.S. Federal Reserve stayed on its policy tightening path most of this year. (Data obtained from www.reuters.com)

 

 Our Range for today: R14.2500 - R14.4500