Daily Commentary - 23 June 2017
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- USD / ZAR 12.9098 - EUR / ZAR 14.4322 - GBP / ZAR 16.4404 -
23-June: EZ PMI - US PMI and New Home Sales
Yesterday the Constitutional Court handed down its judgement on the vote of no confidence, clearly stating that the Speaker of Parliament, Baleka Mbete, has the authority to call for a secret ballot should conditions dictate. The rand rallied as investors cheered the ruling. The ball is now in Baleka’s court and if her decision is deemed irrational, it can be taken back to the courts. If she does however follow through, it is highly unlikely that the opposition will secure enough votes for the motion to pass. Removing Zuma will result in a dissolution of parliament and a cabinet reshuffle, causing ANC MPs to lose their jobs. MPs will therefore not be voting so much on Zuma but on keeping their jobs and this ultimately tilts the scales against the motion succeeding regardless of ideological standpoint that the constitution and country come before the party or individual. President Zuma has however stated that he was fit and doing his job very well, despite the opposition highlighting his various political scandals and the fact that South Africa is in a recession.
S & P MD for sub-Saharan Africa, Konrad Reuss, was quoted saying that reforms were needed to bolster growth where National Treasury could play a more significant role if it had more flexibility in its spending choices and investor sentiment was more positive, this reiterated the point that monetary policy was not anti-transformative. He was alluding to Treasury having more say in cutting down on wasteful and irregular expenditure and where it would be given the necessary room needed to consolidate the government’s budget position and turn it sustainable.
Commodity currencies appear to be staging a recovery this morning, as commodity prices are marginally higher than they were yesterday.
US jobless claims published yesterday increased by 3,000 to 241,000. This underscores the strength of the US job market whose biggest problem is a growing shortage of qualified workers.
Eurozone consumer confidence for June came out well above expectations. This is due to increased economic growth and the lowest level of unemployment in eight years.
Oil prices improved slightly this morning, recovering from steep falls earlier in the week, but is set for the worst performing first half in two decades despite ongoing production cuts.
Range for today : 12.85 – 13.15