Daily Commentary - 20 April 2018

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

- USD / ZAR 11.9951 - EUR / ZAR 14.7924 - GBP / ZAR 16.8576 -

Economic Events:

20 April :  EC Consumer Confidence

Market Commentary:

A quiet day again yesterday after what had been a far more vibrant Wednesday.  We opening trading in the low $/R 11.90’s, with again the key 11.91/11.92 level holding firm, a level that we last broke all the way back on the 6th Apr., and that was when the Rand was moving out of the 11.70 / 11.80 range.  11.90 has been called by many of the local Banks as the “new” bottom of the range with 12.15 the top and true to form this level has held, however there still seems to be more than enough Rand bulls hanging in there expecting the break, if not this week, there’s always next.

The Rand was very range bound staying between 11.9150 and 11.9900, with the top end price being paid a little after local trading hours and although some recovery was then seen in the late hour trades in N.Y., early morning trade of today has again driven us back to test the 12.00 level.

Commodity based currencies have performed well this week with the A.U. Dollar leading the chase, followed closely by the Rand, however, it is fair to mention that momentum into commodities is still very slow and steady with concern around Syria and the few unresolved issues around the U.S. / China “trade war” still causing nervousness and playing its’ part in hampering momentum.

International markets were also subdued yesterday, the EUR/USD again failing to break above 1.2400, printing a high of 1.2399 before trading down to 1.2331, and this morning was around 1.2342.  And as much as there was little in it yesterday for the USD/ZAR traders, there was even less on offer for those interested in the EUR/ZAR, with this cross currency pair staying around 11.75/11.76 all day.

Yesterday saw a lot less coming out on the data front with really no surprises, and certainly didn’t have the same excitement of Wednesday.  Out of the States we had the Philadelphia Fed business outlook index improved marginally, to 23.2 points, from 22.3 in March, slightly better than the consensus, however the U.S. expectations of general business conditions in 6 months’ time deteriorated marginally due to expected lower prices and lower new order volumes.

In the UK, Retail Sales growth eased to 1.1% y-o-y in March, from 1.5% in February, worse than consensus of 1.9%.  Food store sales declined sharply along with textiles, clothing and footwear.  Sales of non-food items picked up, as well as household goods items.  And, in the Eurozone, seasonally adjusted current account surplus eased to €35.1 billion in February, from €39 billion in January.  The surplus on the trade balance narrowed, which was very much in line with the forecast and all-in didn’t seem to effect markets.

Today we have the release of Eurozone Consumer Confidence and don’t expect anything in the way of surprises here, with the USD/ZAR likely to take most direction from the US and commodities developments.

Our Range for the Day    :       11.9100  -   12.0600