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Daily Dose

20 November 2019

Good morning,

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On the wires

International:

  • North Korea says no more talks with US just so Trump can brag
  • China says only it can rule on Hong Kong constitution
  • Scientists used artificial intelligence to discover a 2,000 year-old stick figure in Peru's mysterious Nazca Lines
  • Elon Musk argues in court documents that his Twitter can't be taken as factual because he tweets about zombie apocalypses and being a Martian
  • Wallabies name New Zealander Rennie as new coach

Local:

  • Durban beach stabbing mystery: Victims' identities released
  • EFF's Malema, Ndlozi to appear in court for allegedly assaulting cop
  • More than 90% of Gauteng pupils placed in schools as November 30 deadline looms
  • Brass valuables, including pulpit, stolen from Cape Town church
  • Pieter-Steph du Toit stands tall at BrightRock Players Choice Awards

Two cent’s worth…

Currency Crackdown

The rand strengthened within its recent trading range (closing at 14.77 to the dollar from an open of 14.82) amid a supportive environment for risk assets, with investors hoping to see a potential breakthrough in US/China trade talks and the release of the Fed’s last meeting minutes. While, the mixed reaction to the appointment of the new Eskom CEO dominated local news outlets. The appointment of Andre de Ruyter to the Eskom helm is seen as an important first step to turning around the power utility, however concerns about his track record and suitability to the role has cast some doubts that Eskom can be salvaged along with a long list of issues that need to be solved before foreign investor sentiment starts to show a substantial reversal for SA assets. Despite all that, trade talks continue to be the dominant driver in the markets, with the rand doing well to hold on to it gains overnight to trade at 14.77 despite some new issues popping up. Looking to tomorrow, we have the SARB interest rate decision to look to - market expectations are for a no cut.

The dollar edged slightly higher this morning on slight risk-aversion as a lack of clarity on trade talks kept investors cautious. Optimism over a deal being struck had risen overnight following reports that negotiations, which failed in May, would be considered a starting point in deciding what US tariffs on China would be rolled back. However, those hopes were dashed by another warning from Trump of more tariffs if talks collapse and by a firm response from China's stern over the passing of two Hong Kong-related bills in the US Senate. There was also focus on Donald Trump’s meeting with Fed Chair Jerome Powell ahead of the release of the Fed meeting minutes today, with the President continuing his pressure campaign to get the Fed to cut rates.

Looking towards Europe, the euro found some strength on the back of Trump and Jerome Powell meeting on Monday. This being said, the euro still remains fragile with the market awaiting ECB minutes of their October policy due on Thursday. The Pound also saw some gains after a poll showing Prime Minister Boris Johnson’s Conservative Party increasing its lead over the Labour Party, but this did not last long after we saw the pound retreat slightly after Labour Party leader Jeremy Corbyn beat expectations in the debate against Boris Johnson. Very light economic data front for both currencies.

Elsewhere Asian markets fall due to the recently passed legislation by the US Senate. Oil is weaker this morning after recording its biggest one-day loss in seven weeks on concerns over a supply glut, while gold has strengthened slightly on safe-haven buying.

What to look out for today?

  • SA – Inflation Rate MoM & YoY
  • US – FOMC Minutes
  • SA – Core Inflation Rate YoY

 

Did you know?

Cats have 32 muscles that control the outer ear while humans have only 6.

 

Have a good day,

Keaton

 

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