DAILY MARKET UPDATE - 09 JULY 2019

capital markets

Merchant West Capital Markets

USD/ZAR 14.1838 | EUR/ZAR 15.8950 | GBP/ZAR 17.7076

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:

08 July - US: Consumer Credit

09 July - US: NFIB Small Business Optimism | JOLTS Job Openings

10 July - UK: GDP | Industrial Production y/y | Manufacturing Production y/y| Trade Balance | US: MBA Mortgage Applications | FOMC Meeting Minutes | Fed's Bullard To Speak

11 July - SA: Mining Production | Gold & Platinum Production | US: CPI (y/y) | Initial Jobless Claims | Monthly Budget Statement

12 July - EC: Industrial Production WDA (y/y) | US: PPI Final Demand (y/y)

Market Commentary:

The rand appears to have steadied after stronger employment data from the U.S. last week sent the local currency into a tailspin. Trading largely range-bound at this stage, the absence of any significant domestic data will leave the rand exposed to international headlines in the short term. As the U.S. economy gains momentum and the previously anticipated interest rate cuts by the U.S. Federal Reserve become less probable, yield-seeking funds could soon return to safer assets, to the detriment of emerging market currencies. On the JSE, the Top40 traded up 0.21% and the AllShare up 0.25%.

In the U.S. market, “The dollar traded near a three-week high against its peers on Tuesday, as investors pared bets on aggressive U.S. interest rate cuts ahead of the Federal Reserve chairman’s testimony to Congress on the economy”. “A sharp rebound in U.S. job growth in June reduced expectations that the Fed will cut interest rates by 50 basis points when it meets at the end of July”. “Fed chief Jerome Powell’s comments in two-day testimony to Congress beginning on Wednesday will be watched to determine whether traders will continue to reduce bets for deep interest rate cuts, which could help the dollar continue its rebound against major currencies” (source: Reuters). 

In the European markets, “Sterling was pinned near a six-month low versus the dollar on speculation the Bank of England will soon join other major central banks in easing monetary policy in response to growing worries about the global economy and Britain’s exit from the European Union”. “Data on UK gross domestic product and industrial output are due Wednesday, while the Bank of England will release its financial stability report on Thursday, which could help traders gauge whether the BoE will take a more dovish view of the economy” (source: Reuters). 

Range for the day: 14.10 - 14.35