DAILY MARKET UPDATE - 11 JULY 2019 | Merchant West

DAILY MARKET UPDATE - 11 JULY 2019

capital markets

Merchant West Capital Markets

USD/ZAR 13.9294 | EUR/ZAR 15.6983 | GBP/ZAR 17.4543

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, along with its emerging market peers, has been one of the major beneficiaries of more relaxed stances towards monetary policy across developed economies.  With global economic growth slowly dissipating, central banks have been inclined to implement measures in an effort to revive the ailing economies. Expectations were for the U.S. Federal Reserve to follow a similar path, but were soon revised following the release of stronger jobs data at the end of last week. “However, strong U.S. jobs data on Friday all but ended expectations of a bold interest rate cut from the Fed at its meeting this month, leaving investors in search of hints on where rates are headed”. “South Africa’s rand firmed on Wednesday as the dollar weakened after U.S. Federal Reserve Chairman Jerome Powell highlighted risks to the U.S. economy in remarks that could bolster expectations of an interest rate cut later this month. The rand was also boosted by news that President Cyril Ramaphosa has re-appointed South African Reserve Bank Governor Lesetja Kganyago for another five-year term”. (source: Reuters)

In the U.S. market, “The dollar eased on Thursday after Federal Reserve Chairman Jerome Powell set the stage for a rate cut later this month, vowing to “act as appropriate” to ensure the world’s biggest economy will be able to sustain a decade-long expansion. In testimony to Congress, Powell pointed to “broad” global weakness that was clouding the U.S. economic outlook amid uncertainty about the fallout from the Trump administration’s trade conflict with China and other nations”. “Adding to a generally dovish tone in his testimony, the minutes from the Fed’s previous policy meeting showed many policymakers thought more stimulus would be needed soon, reviving speculation of an aggressive rate cut”. (source: Reuters)

In the European markets, “Britain’s economic gloom and a fast-approaching Brexit deadline kept sterling near two-year lows on Wednesday, while diplomatic spats with the United States and China highlighted the country’s troubled ties with other trade and political partners” (source: Reuters).

13.80 - 14.15