Daily Dose

19 October 2018

Good Morning,

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On The Wires,

Prince Harry climbs Sydney Harbor Bridge…EU likely to extend Brexit transition period…US Army general survives Taliban attack…Tesla CEO Elon Musk just introduced a 'lower-cost, mid-range' Model 3 via Twitter…Pope gets invite from Kim to visit N. Korea…Gerrie Nel eyes next target…Ramaphosa launches commission of inquiry into Public Investment Corporation (PIC)…Patricia de Lille approves R4.5 million budget for Cape Town’s Festival of Lights…Parents fume after school shaves son's hair…Renaming Robben Island swim after Theodore Yach opposed…Friends of Benzema suspected of attempted kidnapping…Semenya reflects on meeting Madiba…Pakistan batsman run out in bizarre fashion…Serena's coach calls for on-court coaching in tennis…Sergio Perez extends F1 contract with Force India.

Fun Friday

Currency Crackdown

Thanks to Nyiko,

The rand had a steady trading session yesterday but weakened against the dollar towards the end of the day, reaching a high of 14.46/$, as risk factors weighed on the market and as the dollar found some support on the back of Wednesday’s Fed minutes release. The rand has spent most of the week tracking other emerging market currencies (which in turn have tracked global developments) with local factors pretty much taking a back seat. We would have expected weaker mining production figures (which fell 9.1% vs expectations of a 4% contraction) to have a big impact but the rand all but ignored the release and continued to soldier on, even strengthening at some point. It looks like everyone is just waiting for next week’s Medium-Term budget before taking an outright position on the currency.

Meanwhile, several earnings misses from US industrial firms and a Bank of America downgrade of the US housing sector piled on to concerns that higher interest rates and trade tensions are starting to hit profits. Also hurting the risk appetite was tensions between the EU and Italy over its debt plans, with euro reaching a two-week low after the European Commission said Italy's 2019 budget draft is in serious breach of EU budget rules. Meanwhile, the EU-UK summit failed to reach decision on Britain’s exit from the euro zone and we’re looking less likely to see a positive conclusion, with PM Theresa May commenting yesterday that the EU’s proposal on the Irish border was unacceptable.

On the economic front, Chinese GDP slowed more than expected to its weakest pace since 2009 as the country's trade war with the US puts pressure on growth, while industrial production figures also missed targets. This could potentially weigh on emerging markets moving forward. The only other release expected today is US existing home sales.

In other markets, global stocks continued their slide for a third consecutive day in risk off trade yesterday. Asian stocks were mostly lower this morning, with just China’s Shanghai Composite reversing its losses to stage a late rally after the nation’s top regulators pledged to keep financial risks under control. Elsewhere, oil traded near its lowest level in almost a month after expanding American stockpiles overshadowed tensions between the US and Saudi Arabia over the disappearance of Jamal Khashoggi. Gold is trading slightly higher.


Did You Know?

Apple launched a new privacy website that lets you download a copy of everything the company knows about you.


Have a super weekend,

FXOne Team.


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