Daily Commentary - 17 April 2018

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

- USD / ZAR 11.9879 - EUR / ZAR 14.8758 - GBP / ZAR 17.2298 -

Economic Events:

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:

The week started with the rand opening the session trading around 12.0800, in what proved to be one of the most unresponsive sessions for some time USDZAR trading between 12.0450 and 12.1075, closing the session basically where it had opened. The rand has been holding steady as most global tensions dissipate. President Ramaphosa yesterday announced the introduction of a campaign aimed at generating new investments worth USD100bn over the next five years .The start of this incentive will be around August or September this year where an investor’s conference will be held to discuss most of the specifics around the investment climate in South Africa and about the opportunities in South Africa.

US President Trump talking about China and Russia's “playing the Currency Devaluation game” was the most notable titbit in an otherwise quiet session for the major currencies, but the markets shrugged it off with the more important Chinese yuan actually having appreciated in recent months. For the majors there were no moves greater than 1% and the greenback actually finished offered with risk sentiment perking up out of the weekend but the Treasury curve continuing to flatten. DXY closed back below the 89.50 handle, first since 27 Mar. The EUR crucially continues holding in the green, CFTC data showed the huge net long position rose back to nearly its record highs so is still very much an embedded consensus trade.  ( ETM)

Over the next week, officials from many G10 and EM countries will convene in Washington DC to attend the annual IMF/World Bank meetings. During these meetings, the IMF will present its global growth forecasts for the next few years which, it will be likely to have been revised up since the October 2017 meetings and the January 2018 update. This is due to stronger growth in the US (on the back of tax cuts and spending increases) and some EM countries such as Turkey, Poland, South Africa and Brazil.

The IMF and World Bank will also facilitate discussions on a broad range of topics, ranging from international cooperation on governance, trade and tax systems to how to tackle climate change, improve education and the effectiveness of aid. They will also be having discussions on subjects such as such as global trade wars; the rising vulnerability of developing countries with high sovereign and corporate debt; the US Federal Reserve’s balance sheet reduction; and the adoption of ‘fintech’ and its impact on global financial markets.(BNP)

In terms of data releases, the focus of attention in the coming week is likely to fall on South Africa’s CPI for March released on Wednesday.

Not much in the way of clear-cut direction to speak of at the moment. Directional momentum is lacking, but the fact that the USD is once again under tremendous pressure, that Chinese growth is ramping up, that a local delegation is seeking to attract investment for SA and that there are generally positive undertones to the developments in SOEs could see the USD-ZAR nudge back below the 12.0000 handle and retest the lower limits of the recent range around 11.9000. (Investec)

Our range for the day : R 11.9000 – R12.1500