DAILY MARKET UPDATE - 03 SEPTEMBER 2019 | Merchant West

DAILY MARKET UPDATE - 03 SEPTEMBER 2019

capital markets

Merchant West Capital Markets

USD/ZAR 15.2622 | EUR/ZAR 16.6939 | GBP/ZAR 18.2656

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:

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:

South Africa's seasonally adjusted Absa Purchasing Managers' Index (PMI) declined in August, as business activity and new sales orders slumped, a survey showed on Monday. The index, which gauges manufacturing activity in Africa's most industrialised economy, fell to 45.7 in August from 52.1 in July, falling below the 50-point mark separating contraction from expansion. All of the five major subcomponents in the index were below the neutral 50-point mark. “Respondents continued to be fairly downbeat about exports for a third straight month, while domestic demand likely also weighed on orders," Absa said in a statement.

Sterling neared its weakest against the U.S. dollar in more than two years on Tuesday amid mounting uncertainty as British lawmakers prepared to vote on the first stage of a plan to block Prime Minister Boris Johnson from pursuing a no-deal Brexit. Johnson's opponents will put forward a vote that would enable them to seize control of the parliamentary agenda on Wednesday to try to pass legislation that would force Johnson to seek a three-month delay to Britain's EU exit. Johnson has made it clear that if the government was defeated, it would hold a vote on Wednesday to approve an early election, most likely to be held on Oct. 14.

"The pound is being sold all over the place, because the political risk has forced us to recognise that a no-deal Brexit is possible," said Junichi Ishikawa, senior foreign exchange strategist at IG Securities in Tokyo. "At this point, I see no reason to stay long in sterling."

U.S. financial markets were closed on Monday for a public holiday, but weakness in other major currencies and a slight rise in U.S. Treasury yields in Asia helped the dollar index rise 0.22% on Tuesday to 99.284.

The euro fell to its weakest in more than two years against the dollar after a survey on Monday showed European manufacturing contracted for seven straight months, reinforcing expectations that the European Central Bank will ease monetary policy at a meeting next week.

The ECB's Governing Council holds its next monetary policy meeting on Sept. 12 and has all but promised a stimulus package, with economic growth faltering amid a global trade war and Germany's manufacturing sector already in recession. Market expectations are that it will carry out several interest rate cuts in the coming year, along with a fresh round of bond purchases, commonly known as quantitative easing.

The Reserve Bank of Australia's decision to leave interest rates unchanged at a record low of 1% saw the Australian dollar ease 0.11% to $0.67111. Economists expect the RBA to cut two more times to boost inflation and support a stuttering economy, a Reuters poll showed.

China has lodged a complaint against the United States at the World Trade Organization over U.S. import duties, the Chinese Commerce Ministry said on Monday. The United States began imposing 15% tariffs on a variety of Chinese goods on Sunday and China began imposing new duties on U.S. crude oil, the latest escalation in their trade war. China did not release details of its legal case but said the U.S. tariffs affected $300 billion of Chinese exports.

*Iinformation from Reuters.com 

Range for the day: 15.15 - 15.40