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Daily Dose

25 May 2018

Good morning,  


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On The Wires,

Trump says US military 'is ready if necessary' after Kim Jong Un summit cancellation…US jury awards Apple $539 million in Samsung patent retrial…Iran's supreme leader just made 5 tough demands for Europe to save the nuclear deal…Police Seize $29 Million in Cash Linked to 1MDB…Hawaii helicopter evacuation readied as new lava stream hits ocean…South African Anti-Graft Panel Plans Hearings in August…Teen soccer boy sues Home Affairs for thwarted travel attempts…Farm murderers laugh and smile at 40 year sentence…Buses, cars set alight in protest on Cape Town highway…SSA probing major 'leak' of personal data of SA drivers who use ‘ViewFines’…Tuks Women7s team beat Wales on way to winning Paris title…Serena, Venus get French Open doubles wildcard…Boks lose Whiteley for Wales Test, England series…Fans return 1,000 tickets as Champions League price hikes spell misery…Disgraced Smith set to play in T20 event in Canada.

Fun Friday

Currency Crackdown

A confused rand traded in a 12.40-12.55 range for the day, as traders waited for the result of the SA Monetary Policy Committee meeting. As expected, there was no change in rates (repo rate @ 6.5%) and the immediate expectation is that we should not experience a rate change for the remainder of the year. Inflation is the main concern of the MPC, due to increased oil prices and a stronger USD but they predict 4.9% year on year for 2018, 5.2% for 2019 and then 5.2% for 2020. The MPC growth expectations were revised slightly higher for 2019, to 1.7%. Interestingly, the Governor mentioned that with higher US bond yields, they do not expect a repeat of “taper tantrum’.

International markets continue to sway as continued global trade wars and the re-emergence of tensions between North Korea and the US, take centre stage. In saying that, EURUSD was well behaved overnight but GOLD was slightly higher while Brent was almost unchanged, as Russia suggested that they may increase output. US and Asian equity markets are lower this morning, on the back of the cancelled N. Korea/ US meeting. The US 10 year yield has also remained below the psychological 3% level which should lend some support to the rand and local bonds. At this point this morning, the Turkish Lira has lost small ground against the $ but let’s hope it can stem further losses or else the rand might start getting nervous.

Economic releases today include: nothing local, Germany have IPO business climate and then the UK have GDP (be careful GBP users) and government spending. Besides UK GDP, the US has the most potential to move the market today with the release of durable goods orders, Michigan survey and then we also have various Fed speakers. Most attention will be on the afterhours S and P South Africa review, which is expected to be unchanged.

Its Friday and there has been some volatility of late. If you have something to do, do it and try and avoid the Friday afternoon liquidity vacuum. Keep both eyes on the game, this market is vicious.

 

Did You Know?

The Hawaiian alphabet has 12 letters.

 

Have an awesome weekend

Team FXOne

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