Daily Dose

13 August 2020

Good Morning,

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On the wires

  • Eskom to implement stage 2 loadshedding on Thursday morning
  • Cosatu raises concerns with jobs on the line due to alcohol ban
  • Kanye met with White House adviser Kushner as he eyes 2020 election spot
  • Princess Diana musical to debut on Netflix before hitting Broadway
  • Global COVID-19 cases surpass 20 million, WHO warns against despair
  • Tiger to defend Masters title behind closed doors

Two Cents Worth…

“The best thing about the future is that it comes one day at a time.”

– Abraham Lincoln

Currency Crackdown...

*We would like to thank Quinten Bertenshaw from ETM Analytics for the use of his currency comment.



Turbulent sentiment was the order of the day yesterday, which saw the ZAR recover from its early morning losses. The US Dollar was looking to regain its footing early on in the day but was hampered by the continual delays in stimulus talks by US policymakers, with Democrats and Republican parties shifting blame for the lack of agreement thus far. This did allow emerging market currencies some room to recover throughout the day, but ultimately the EM basket ended mixed. In the ZAR’s case, the currency hit a session high of 17.34/$ after the morning’s low of 17.57/$. However, the local unit ended the day flat around the 17.42/$-handle.

Sentiment has been largely trading around the next round of US stimulus. US CPI data yesterday showed inflation progressed faster than expected, but high levels of unemployment is likely to keep inflation muted in the medium-term. This points to further stimulus being likely, however the level of which is causing market volatility at present.

In terms of local data, the SACCI Business Confidence Index (BCI) strengthened marginally in July to 82.8 from an upwardly revised figure of 81.4 in April. Despite the rebound, the BCI remains close to the record low recorded during the strict national lockdown and well below the 12-month average of 90.3. Meanwhile, business sentiment is likely to remain subdued going forward due to ongoing social distancing measures and the government’s alleged corruption in response to the pandemic. In the same vein, retail sales figures for June reflected a rebound, however at a far slower pace than the month prior despite the further reopening of the economy. In Q2, retail sales fell 22.4% compared to the same period last year, down from -18.2% in Q1, signalling a deep contraction is imminent for the economy this year.

Although these data figures were unlikely to have driven the ZAR’s movements, media reports of a further reopening of the economy and unbanning of tobacco and alcohol products likely helped the ZAR off session lows. Also, in the headlines, SARB Governor Lesetja Kganyago once again fended off suggestions for further central bank easing stating that quantitative easing should be treated as a last resort to prop up the economy. Alongside a further reopening of the economy, only growth-enhancing policies will allow the economy to recover materially and a further rebound in the ZAR.

For the day thus far, EM sentiment remains mixed from yesterday, while the ZAR has backtracked once again in early trade. Mining production data for June is to headline local data today and is likely to back up the deep contraction experienced in Q2. Directional impetus for afternoon trade may rather come from the US initial jobless claims data print, with the pace of reemployment having direct implications on the speediness of US stimulus talks.

On the radar…

  • All – Corona updates
  • All – US/ China tensions
  • SA – Mining Production
  • US – Initial Jobless Claims

Did you know?

“Running amok” is a medically recognized mental condition


Have a great day,



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