DAILY COMMENTARY - 26 APRIL 2019

Merchant West Business Finance

Merchant West Capital Markets

USD/ZAR 14.4138 | EUR/ZAR 16.0595 | GBP/ZAR 18.6007

Please feel free to contact us on the details below:

JHB: (011) 305-9500 | PTA (012) 742-8600 | CPT (021) 552-7007 

email: treasury@merchantwest.co.za

Market Data:

26 April - US GDP Annualised | Personal Consumption | GDP Price Index

Market Commentary:

The Rand found slight relief yesterday by closing the day some 0.17% stronger after touching highs of 14.55 in a week where we have lost more than 2.5% and traded 50-big figures to finally end the five day losing streak. We are seeing some further consolidation this morning as we broke below 14.40 to trade a low of 14.30 (currently trading 14.38) – this dip is in line with our expectations after the move largely felt to be in the overdone territory. The U.S. Dollar strength seems to be calmed after breaking a few key technical levels this week. Expect to see a relatively mixed day ahead with markets finalising month-end activities but two-way risk will persist. Investors will be on the lookout for the U.S. first quarter GDP release later this afternoon (BNP Paribas).

Asian shares drifted off in sleepy trade on Friday, while the dollar held around two-year highs on speculation that figures later in the day will show the U.S. economy outperforming the rest of the developed world. The euro was off 1 percent for the week at $1.1133 as euro zone economic figures continued to disappoint. Against a basket of currencies, the dollar was 0.8 percent firmer for the week so far at 98.145 having touched it’s highest since May 2017. “The dollar will remain bid in this environment while data continues to look more favourable from the U.S., especially with regard to the EU,” said Nick Twidale, head of operations at broker Rakuten Securities. “Today’s U.S. GDP print could be crucial from a technical point of view. If we see a good number it will probably see the euro targeting the key psychological level of $1.1000.” The yen proved an outlier by gaining as speculators cut short positions ahead of holidays which will see most Japanese markets shut for six whole trading days. The exceptionally long break has investors concerned there could be another “flash crash” like the one in early January that drove the yen massively higher in a matter of minutes (Reuters.com).

MSCI’s broadest index of Asia-Pacific shares outside Japan slipped 0.2 percent, while E-Mini futures for the S&P 500 lost 0.1 percent. The mood might lighten later should data on U.S. gross domestic product (GDP) prove as upbeat as some now expect. A string of solid numbers has led analysts to revise up their forecasts for growth and the latest median polled by Reuters is for an annualized 2.0 percent. The closely-watched estimate of GDP from the Atlanta Federal Reserve is projecting an outcome of 2.7 percent, a huge turnaround from a few weeks ago when it was at 0.5 percent. European Central Bank Vice-President Luis de Guindos on Thursday opened the door to more money-printing if needed to boost inflation in the euro zone. Rate cuts look much likelier in Australia and New Zealand after recent disappointingly weak inflation reports. The Federal Reserve holds a policy meeting next week and is expected to reaffirm its patient stance. A Reuters poll of analysts out Thursday found most believed the Fed was done with tightening altogether. Wall Street had ended Thursday mixed after a raft of earnings reports. The Dow fell 0.51 percent, while the S&P 500 lost 0.04 percent and the Nasdaq added 0.21 percent.  Amazon.com Inc shares firmed after the market closed as the company reported a first-quarter profit that topped estimates. Shares of Facebook Inc. and Microsoft Corp both jumped on their results, but Intel Corp fell sharply after downgrading revenue forecasts. In commodity markets, spot gold was idling at $1,280.12 per ounce. Brent crude ran into profit-taking after hitting $75 per barrel on Thursday for the first time in nearly six months following the suspension of some Russian crude exports to Europe (Reuters.com).

Range for the day: 14.30 – 14.55