Daily Commentary- 16 April 2018

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

- USD / ZAR 12.0694 - EUR / ZAR 14.9238 - GBP / ZAR 17.2418 -

Economic Events:

16 April : US Empire Manufacturing ; Retail Sales

17 April : GE ZEW Survey Expectations - US Housing Starts ;Manufacturing Production

18 April : SA CPI Data - EC CPI Data

19 April : US Initial Jobless Claims

20 April :  EC Consumer Confidence

Market Commentary:

A really quiet  week last week when it came down to data, but certainly not quiet when it came to the Markets and specifically the currencies. The U.S. was the key focus and will remain so this week .The U.S. trade war with China saw us starting last week very nervously, with a risk off climate and the issues with Syria and Russia were also not helping things as the week pushed along. Both those concerns still not completely behind us, and again on the data front for the week ahead, there may not be much out  there to effect markets with local CPI on Wednesday and the BoE Rate decision being by far the main two to watch, but this doesn’t necessarily mean currencies trading will be having a quiet time .

Local politics has been pushed into the background of late with the funeral of Winnie Madikizela-Mandela taking centre stage. It is expected to see Cyril Ramaphosa being brought back into the focus of the media again, which hopefully could lead to off-shore investor confidence being pulled back into the rand. But the market would need the right re-assurance to be offered by him especially around international trade, which may in itself not help much. While focus on the U.S. still hangs over us all as to what their next step may be around the tensions involving the allied forces bombing of Syria.

The rand has entered a new range which sees resistance now at the 12.1575 level with bulls sadly not enjoying anything much under 11.9250, however there might still be some appetite for the Rand if commodity prices continue to find support. Analysis of the commodity currencies relative to a basket of 15 other major currencies shows that they are in the middle to top-half of the performance table, suggesting that they have indeed benefited from stronger gold and commodity prices. Although the ZAR is the worst performer of the three major currencies, it is also the main EM of the three and as such cannot be directly compared.  (ETM).

As mentioned above local CPI data will be key and to some extend there will also be focus on the Retail Sales figures which are due as an offering on some insight to the impact that we might be seeing on the Current account, but again it is the Dollar that is still creating movement across most markets and that the developments related to Syria and the "cold war" emerging between Russia and the West is for now the most likely catalyst on the short term.

Our Range for the Day   : R 12.0200    - R 12.1500