News

Daily Dose

21 February 2019

Good Morning,


Follow us on Twitter ( @fxonefa ), Facebook and LinkedIn for regular updates.

 

On The Wires,

International:

  • Samsung just announced the first foldable phone
  • Huawei president promises not to spy on US as Trump considers banning the company’s equipment
  • Russia bans soldiers from using smartphones to prevent tracking of military
  • Johnson & Johnson receives federal subpoenas related to baby powder litigation
  • Atletico stun Ronaldo and Juventus

Local:

  • Mboweni's Budget shows further erosion in SA's fiscal strength
  • Convicted racist Vicki Momberg has to stick with 'incompetent' lawyer until appeal
  • Man held, commuters still in shock after MyCiTi buses stoned in CBD
  • Traffic around Cosmo City, surrounding areas disrupted over shutdown
  • Man walks into Reserve Bank, asks to 'exchange' R2m in fake cash

Two Cents Worth

“Education is the passport to the future, for tomorrow belongs to those who prepare for it today.”

- Malcolm X

 

Currency Crackdown

Thanks to Nyiko,

The rand had quite the wild ride yesterday, trading flat for most of the day before a knee-jerk reaction to the budget statement sent the currency skyrocketing before it recouped those losses and settled back at its opening levels. The rand initially opened the day at 14.03/$, 15.92/€ and 18.30/£ respectively and gradually weakened but remained relatively stable heading into the budget statement. As details around the budget filtered through the market (particularly a R69 billion bailout for Eskom) we started to see a large sell-off in the rand that sent it to its weakest levels in months, eventually peaking at 14.37/$, 16.28/€ and 18.74/£ respectively. Once the dust settled and traders assessed the impact of the budget on SA’s fiscal future and credit rating, the currency pulled back to its prior levels and strengthening even further overnight (13.93/$, 15.82/€ and 18.21/£). Attentions now turn to Moody’s credit statement, scheduled for 29 March, to determine whether the budget “did enough” to stave off a downgrade. In comments yesterday, the agency said that the Budget “highlights the government’s limited fiscal flexibility amid a challenging economic environment”. Make of that what you will. Meanwhile, the Treasury said that it has been in touch with the rating agencies regarding the difficult situation and that it would continue to engage with them next week during Director-General Dondo Mogajane’s London roadshow to assess its plans in detail.

On the majors, the dollar inched up against its peers after the minutes from the Fed’s last meeting revived expectations for a possible US rate hike this year while investors shifted their focus back to trade issues for fresh directional cues. In the minutes, the Fed said that the US economy and its labour market remained strong, providing some expectations of at least one more interest rate hike this year. Meanwhile, President Trump said that the US would impose tariffs on European car imports if it cannot reach a trade deal with the EU. In the UK, the pound took a knock after three lawmakers defected from British Prime Minister Theresa May's ruling Conservative party in a move that could undermine her Brexit strategy. The pound was also weighed down after Fitch said it may downgrade the UK’s "AA" debt rating based on growing Brexit uncertainty.

In other markets, the global stocks were mostly higher with Asian stocks continuing that trend this morning (China being the exception). The rand is trading firmer across the board despite generally weaker emerging market currencies. Meanwhile oil is trading higher on the back of supply cuts from major producers and positive US/China trade sentiment, while the stronger dollar has weighed on gold prices.

What to look out for today?

  • EU – ECB Member Speech
  • EU – ECB Monetary Policy Meeting
  • EU – Markit Composite PMI
  • US – Markit Composite PMI
  • US – US/China trade talks continue
  • US – Jobless Claims

Did you know?

2% of the world's population are natural redheads.

Have a great day,

Bongani

 

To subscribe to the Daily Dose click here.

 

back