Daily Commentary - 18 April 2018 | Merchant West

Daily Commentary - 18 April 2018

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

- USD / ZAR 12.0216 - EUR / ZAR 14.8665 - GBP / ZAR 17.1640 -

Economic Events:

18 April : SA CPI Data - EC CPI Data

19 April : US Initial Jobless Claims

20 April :  EC Consumer Confidence

Market Commentary:

Yesterday saw the rand staring the day a cent or two under the $/R 12.0000 level, and for a brief moment many Rand bulls started to get excited that possibly the key 11.92 level would again get tested.  No to be, within an hour we were back above 12.00 and slowly worked our way to test 12.0470 as the high in the late morning trading session. Thereafter we returned to 12.01 and only in the later afternoon session did we see 12.00 breaking again to test 11.9650 as the low of the day, a price paid around the closing bell in London.

The closing session yesterday also did bring a smile or two back onto the faces of our local EUR/ZAR Importers. As we again for a brief moment got below 14.80, but this was sadly after local markets had closed, and on our return this morning we are once again back in the mid 14.80’s with the $/R again a cent or two above 12.0000.

Yesterday saw no data out of any significant importance and it was one of the quietest days we’ve seen in the Rand for quite some time. Watching paint drying would have been more exciting, but we expect today to be a lot more fun where we should see a lot more trading taking place & on both sides of the market.

Local CPI data comes out first, thereafter our Retail Sales, and then from the U.K. we have their CPI, PPI and house price index. From Europe we have the Eurozone CPI, and later on from the States we have the release of the FED Beige book, plus have Dudley and Quaries scheduled to speak, (but that should be a little after trading hours). Furthermore there is an exclusive interview taking place with Cyril Ramaphosa on Bloomberg (DSTV - Channel 411) at 14h30 local time, and although we don’t feel this will be much of a market mover it still should be quite promising and well worth the listen.

There is an expectation to see headline CPI inflation to continue rising gradually over the coming months and expect a print of around 4.3% y-o-y for March. ABSA is quoted saying that they believe that the favourable base effects that have delivered much of the decline in food inflation in recent months have run their course and look for a marginal increase in food price inflation in March.  Moreover, they think an adverse base effect is likely to deliver a marked increase in core CPI inflation to 4.6% y-o-y in March from 4.1% y-o-y in February.  However, Stats SA will include its annual survey of education fees with the March release and these are a source of uncertainty for the CPI print, and further there is no clarity on how Stats SA will treat the effects on the cost of living of the implementation of free higher education for families earning less than ZAR350k per annum.

SA Retails Sales February figures out thereafter could also prove useless in offering more clues for the Q1 2018 GDP grow outlook.  We saw that the Retail Sales data have become highly volatile around year-end, partly due to the effects of November Black Friday specials, but suspect that February will come in a few basis point stronger than the January 3.1% m-o-m print at around 3.4% m-o-m.

Our Range for the Day  :-   R11.9500  -   R12.0800