If last week was a busy one in terms of important economic events then the week ahead looks set to make the Rand’s head spin!!!?Fortunately we ended the week off firmly on the front foot so let’s see if we can keep that momentum going into today.??
These are the mid rates at 6:45 today:
Brent Crude = $102.58 per barrel
- After trawling sideways for most of last week the Rand finally sprung to life on Friday.?After opening at R17.04 to the Dollar we then made an impressive move to R16.79, a level last seen on the 9th?of July, before closing the week at R16.83.?Respectable gains were also notched against the Pound and the Euro.??
- Our Reserve Bank surprised the market with a 75bps interest rate hike on Thursday afternoon while also leaving the door wide open for an even bigger hike of 100bps in September should they feel the need.?The Rand enjoyed a small move stronger on the day but it wasn’t until Friday when the real benefit was felt, this as we powered on to R16.79.?Confirmation that Eskom would be suspending load shedding would also have been a tailwind for the Rand.??
- The Rands’s move stronger on Friday was definitely thanks to the SARB’s aggressive rate hike, this as the Dollar was actually stronger against most other currencies on the day.?A risk-off mood dominated the market after a manufacturing PMI reading in the States fell from 52.3 to 47.5, with any reading below 50 points indication contraction, while Snap’s shares cratered by -39% thanks to a poor revenue report which sent the wider indices lower.?The Dollar inched higher as a safe haven asset which makes the Rand’s gains on Friday all the more impressive.??
- The week ahead sees the local calendar rather empty save for our producer inflation reading on Thursday followed by our balance of trade on Friday.?Price action will be driven by international headlines, and with a massive week in the US quarterly earnings season where many major names are reporting coupled with a FED policy meeting, another US inflation report and a US quarterly GDP print, the potential for volatility is unusually high.??
- Looking quickly at US earnings we get reports from the likes of Microsoft, Alphabet (Google), Meta (Facebook), Amazon, Apple and many more this week.?Expectations are very low thanks to all the negative headlines around a looming recession, as well as a strong Dollar eroding the value of foreign earnings for US companies, and as we saw with Snap on Friday if a report disappoints then risk-off sentiment ensues.?But equally, with the bar being set so low it is easy for these companies to surprise to the upside which would support risk assets, so the Rand is hoping for a slew of healthy reports.??
- The week’s main event is the FED policy announcement on Wednesday evening although their Q2 GDP reading on Thursday followed by the personal consumption expenditure index (PCE) on Friday will also move the market.?The US economy shrank by -1.6% in Q1 and so another quarterly contraction would mean a technical recession is here, although it has been argued that with a labour market at full employment this negates any recessionary talk.?And then PCE on Friday is the FED’s preferred measure of inflation and will be closely watched for any signs of inflation cooling, or not.??
- No local market data today.??
- Possible USD mid rate trading ranges in the Rand today are R16.70 and R17.00.?