DAILY COMMENTARY - 16 MAY 2019 | Merchant West


Merchant West Advisory Services

Merchant West Capital Markets

USD/ZAR 14.1941 | EUR/ZAR 15.9073 | GBP/ZAR 18.2074

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Market Data:

16 May - EU Trade Balance | EU - Eurogroup Meeting | US - Building Permits Change 

17 May - EU Consumer Price Index | US - Michigan Consumer Sentiment Index

Market Commentary:

The Rand continued to trade in a tight range seeing a high of 14.30 and then dipping to a low of 14.18 yesterday closing relatively unchanged slightly in the green for the day as President Trump decided to postpone the European edition of ‘trade Wars’ for now at least. We have lost some 0.3% this morning in a softer open as global economy health debates dominate sentiment. Expect to see much of the same for the trading day ahead with no clear breaks as market moving news is currently at a premium – directional cues will come from U.S./China developments aboard and then followed by the next cabinet that will be selected by the President probably by the end of the month(BNP Paribas).     

Asian shares struggled to find their footing on Thursday as confidence was shaken after the U.S. government hit Chinese telecoms giant Huawei with severe sanctions, threatening to further strain Sino-U.S. trade ties. MSCI’s broadest index of Asia-Pacific shares outside Japan fell 0.25%, hovering not far off its lowest since late January. Japan’s Nikkei lost 0.6%, while South Korean shares lost 1.1%. Bucking the downtrend, Chinese shares recovered on hopes of supportive government policy after opening in negative territory, with the Shanghai Composite Index last trading up 0.5%. Australian stocks advanced 0.5% as weaker-than-expected local job data bolstered expectations for a central bank rate cut. “U.S. markets were buoyed on President Trump possibly pulling back on auto tariffs on both Europe and Japan, but really Asian markets have latched on to the fact that he’s not letting up in the trade war against China,” he added (Reuters.com).

In the foreign exchange market, the Australian dollar touched its lowest since early January after a drop in the country’s full-time jobs supported views the central bank may be forced to lower rates soon to stimulate the economy. “Domestic data is starting to come off. We’ve got increased global concerns as well,” said Rakuten’s Twidale. “Expectations now will be rising that we are to get a cut in June or in the meeting after that.” Against the yen, the dollar dipped a tenth of a percent to 109.47. The euro tacked on 0.1% to $1.1209. Oil prices gained on the prospect of mounting tensions in the Middle East hitting global supplies despite an unexpected build in U.S. crude inventories. Brent crude rose 0.5% to $72.11 a barrel, while U.S. West Texas Intermediate crude fetched $62.34, also half a percent higher. Gold edged up to $1,296.9 per ounce (Reuters.com).

Range for the day: USDZAR: 14.15 - R14.35