Daily Commentary - 22 January 2019
Merchant West Capital Markets
USD/ZAR 13.9033 | EUR/ZAR 15.7832 | GBP/ZAR 17.8857
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22 Jan US Existing Home Sales
23 Jan SA CPI Data | US MBA Mortage Applications | EC Consumer Confidence
24 Jan SA BER Consumer Confidence | EC Markit Eurozone Manufacturing PMI | US Initial Jobless Claims ;Markit US Manufactruring PMI
25 Jan GE German IFO Business Climate
The Rand closed relatively unchanged yesterday after some weakness in the morning session which felt like a spill over from Friday pushed us to highs of 13.91 but then cooled off towards 13.84. The ZAR maintained a weakening bias following poor growth results from the world's second largest economy after a weak China GDP reading (actual: 1.5% q/q s.a., estimate: 1.5% q/q s.a., prior: 1.6% q/q s.a.).
The U.S. Dollar is on a steady rise once again this morning towards two-week high levels and we currently trade 13.89 in a similar feel with EM currencies somewhat consolidating. There is a possibility that flow will increase today with the U.S. back at their desks after their long weekend. ZAR remains resolute despite growth concerns globally on the back of trade and caution persists for risk. A push towards 14.00 would not surprise us but in an orderly fashion. Strong closes below 13.70 or above 14.20 would shift ZAR out of the current range.
At the start of the week, the greenback consolidated mild gains spurred by the flight to safety following yesterday's disappointing China GDP print with the dollar index reaching an intraday high of 96.434. However, this upward momentum was tempered by the downward revisions in the International Monetary Fund (IMF) global growth outlook, with the dollar index closing at 96.336.
The euro remained on the backfoot, reaching a low of $1.1353 before closing at $1.364, as investors remained mindful of languishing growth and persistent inflation in Germany and France.
While Pound Sterling finished in marginally positive territory at $1.2890 after having touched $1.2828 intraday, it continued to be hamstrung by Brexit concerns given the precious little time left until the United Kingdom is due to leave the European Union on March 29 with no concrete deal on the table.
The data calendar is sparse today. SA’s leading indicator is due for release at 09:00. Having increased by 0.2% m/m in October to 105.7, it will be interesting to see if the leading indicator’s positive momentum was maintained in the remaining two months of 2018. A sustained improvement in the indicator will affirm expectations that growth is likely to improve in 2019. We end the day with US existing home sales at 17:00.
Source: Absa; BNP
Our range for the day: R 13.8000 – R 14.0000