DAILY MARKET UPDATE - 30 SEPTEMBER 2019 | Merchant West

DAILY MARKET UPDATE - 30 SEPTEMBER 2019

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Merchant West Capital Markets

USD/ZAR 15.1942 | EUR/ZAR 16.6231 | GBP/ZAR 18.7009

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Market Commentary:

Internationally, White House Economic Advisor Kudlow is reportedly looking at imposing limits on US-based investments in China according to Bloomberg. Kudlow is reportedly discussing with many China hawks within the administration the possibility of delisting Chinese companies from US exchanges, imposing limits on investments in China by US pension funds, and capping the value of Chinese companies included in indexes managed by US firms. Over the weekend, however, an emailed response from the White House to the reports denied these rumours and stated that there are no current plans to stop Chinese companies listing in the US. The initial report saw the markets shudder a bit on Friday, with risk assets declining on the news. Therefore, we should see a bit of a rebound occur at the open in trade today.

Taking a look at developments in the international oil market, it was a hard-hitting week for oil with both the front month Brent contract and WTI reversing much of their respective gains from the previous week. The impetus behind the sharp reversal in oil prices last week was largely a function of the rapid return of production capacity in Saudi following the mid-month drone attacks and growing concerns surrounding the outlook for the global economy.

Looking at the session ahead, there is a plethora of data out of South Africa today, which could potentially provide some fresh directional impetus for local markets. Specifically, the SARB is set to release the Aug money supply and credit numbers this morning, while National Treasury and SARS are slated to releases the latest budget and trade numbers this afternoon.

The USD-ZAR has now been trending higher for two weeks, reaching a top of 15.20 on Friday but retreating back down to 15.13 thereafter, where it trades this morning. The USD-ZAR remains strung between weak domestic and trade fundamentals, and the spectre of looser policy in systemically significant central banks such as those of the US, Eurozone, China and Australia. Although the test of 15.20 will be psychologically significant for the bulls, the USD-ZAR pair failed to sustain this level. With the USD itself on the front foot however, the risks are tilted in favour of further USD-ZAR gains.

Range for the day: R15.05 - R15.35