daily markets commentary

Merchant West Capital Markets

USD/ZAR 15.1517 | EUR/ZAR 16.6246 | GBP/ZAR 18.3063

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Market Data:

02 Sep - GE: Markit/BME Germany Manufacturing PMI | UK: Markit PMI Manufacturing SA | SA: ABSA Manufacturing PMI | SA: NAAMSA Vehicle Sales (y/y)

03 Sep - EC: PPI (y/y) | SA: GDP Annualized (q/q) | US: Markit US Manufacturing PMI | US: ISM Manufacturing

04 Sep-  SA: Standard Bank South Africa PMI | EC: Markit Eurozone Services PMI | Retail Sales (y/y) | US: Trade Balance | Fed's Williams Speaks in New York

05 Sep - SA: Current Account as % of GDP | Current Account Balance | US: Nonfarm Productivity | Initial Jobless Claims | Continuing Claims | Markit US Services PMI

06 Sep - SA: Gross Reserves | Net Reserves | EC: GDP SA (y/y) | US: Change in Nonfarm Payrolls | Change in Private Payrolls

Market Commentary:

Foreign Exchange - The Rand made a slight recovery on Friday despite the trade balance swinging to a surprise deficit in July. The local unit reached a low of R15.1632 against the green-back, before closing the day at R15.1954.With nothing major on the cards in terms of data for the day as well as the fact that today is a US holiday, markets are expected to be relatively quiet. The Rand is likely to take direction from external factors for the time being with no key events happening locally in the short term.

The dollar strengthened on Friday and the dollar index breached the 99.00 level for the first time since May 2017. The dollar index reached a high of 99.023 before closing the day at 98.916. Today marks the effective date for additional tariffs between the US and China as well as a US holiday. The euro fell tremendously on Friday, breaking through the 1.1000 level against the green-back, for the first time since May 2017 on the back of trade concerns and thin liquidity late Friday afternoon. The European Central Bank is also preparing a stimulus proposal that could see rates being cut further below zero. The euro fell to a low of 1.0963 before closing the day at 1.0982.Pound Sterling fell slightly on Friday as Brexit concerns continued to grow. The pound reached a low of 1.2140 before closing the day at 1.2156.

International front - The United States began imposing 15% tariffs on a variety of Chinese goods on Sunday - including footwear, smart watches and flat-panel televisions - as China began imposing new duties on U.S. crude, the latest escalation in a bruising trade war. U.S. President Donald Trump said the sides would still meet for talks later this month. Trump, writing on Twitter, said his goal was to reduce U.S. reliance on China and he again urged American companies to find alternate suppliers outside China.

A new round of tariffs took effect with Beijing's levy of 5% on U.S. crude marking the first time the fuel had been targeted since the world's two largest economies started their trade war more than a year ago. The Trump administration on Sunday began collecting 15% tariffs on more than $125 billion in Chinese imports, including smart speakers, Bluetooth headphones and clothing. A variety of studies suggest the tariffs will cost U.S. households up to $1,000 a year and the latest round will hit a significant number of U.S. consumer goods.

In retaliation, China started to impose additional tariffs on some of the U.S. goods on a $75 billion target list. Beijing did not specify the value of the goods that face higher tariffs from Sunday. The extra tariffs of 5% and 10% were levied on 1,717 items of a total of 5,078 products originating from the United States. Beijing will start collecting additional tariffs on the rest from Dec. 15. Steve Lamar, executive vice president of the American Apparel & Footwear Association, said on Sunday the new tariffs were "just in time for our most important selling season of the year. They claim that they are hurting China but, in reality, they are hurting us. Prices will go up, sales will go down, jobs will be lost." He said the United States "can make progress with China when we engage with them in calm, productive talks, not when we make it more expensive for Americans to get dressed every day."

*information from Reuters       

Range for the day : 15.05 - 15.35