Daily Commentary - 15 August 2017

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

- USD / ZAR 13.3205 - EUR / ZAR 15.6533 - GBP / ZAR 17.2482 -

Economic Events:

15-August: US Retail Sales

16-August: SA Retail Sales - US Housing Starts

17-August: EU CPI Data - US Jobless Claims ; Industrial Production

18-August: No data of real importance

Market Commentary:

The Rand performed rather well yesterday as it only moved largely in one direction, gaining by over 15c on the opening price. At 8h00 yesterday we were round 13.4250 and by 14h00 we had already reached 13.2650, which proved to be the high of the day, but we didn’t retrace by much closing in N.Y. around 13.3250.

It is certainly too early to turn into a Rand bull again as plenty of levels such as the 13.20 haven’t been tested yet , but things are starting to look positive again for EM currencies as Fridays’ U.S. CPI figures didn’t do the Dollar any favours.

Yesterday, however did see FED member, William Dudley sounding a lot less dovish stating that it would not be unreasonable to expect the FED to announce plans in September to start trimming the balance sheet and that he would support another interest rate hike this year if the economy evolves as he expects.

But in another surprise move, Trump called for an investigation into China’s trade operations.  They need to “investigate whether there is a case to investigate China on the grounds of a breach of the Trade Act of 1974.”  If this is Trump positioning on the political playing field ,we do not know, but it is surprising after the alleged “constructive conversation” over the weekend between Trump and Xi on North Korea.

The dollar found some support towards the close of yesterday. The USD/JPY has pushed above 110.00 again, and on the EUR/USD it was a relief to see the Euro giving back some of Friday’s gains and dropping down below the 1.78 level. It was able to return to around 1.1770 and this morning we have seen it push even lower to around 1.1740.

Sterling has also shown to give back some of its gains this morning and has dipped from 1.2970 to around 1.2945.

A quite day is expected in terms of data today with US Empire manufacturing at 14h30 and US Retail Sales to be released at the same time.

Our Range for the Day  :R13.25   - R 13.40