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Daily Dose

23 January 2020

Happy Friday,


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On The Wires,

  • China locks down city at center of deadly virus outbreak
  • Indian man dies after getting attacked by his rooster on their way to a cockfight
  • Libya's Haftar forces threaten to target civilian planes
  • Teacher wounded after shooting at Durban primary school
  • Eskom employee and scrap metal dealership owner arrested for alleged cable theft
  • Weather causes further delays at Australian Open

Two Cents Worth...

Currency Crackdown

The rand staged a late rally yesterday backed by a weaker dollar and improved risk sentiment in the market. Coming from an open at 14.50/$, the currency closed out our trading session at 14.34/$ and even dipped as low as 14.31/$ overnight as fears over the outbreak of the coronavirus in the China subsided. This followed swift updates from the Chinese that the outbreak would be contained. Also likely supporting the rand were reports that JSE listed company Naspers had sold $1.7 billion of its shares in Dutch listed entity Prosus, which it would repatriate in order to buy back its own stocks.

Meanwhile, the ANC briefed the media yesterday on its plans to restructure SOEs – one of the major outcomes was that the party would let big businesses generate their own power and allow municipalities to buy electricity directly from Independent Power Producers (IPPs) – effectively putting an end to the Eskom monopoly. This should go a long way to alleviating the power crisis and getting economic growth back on track. On SAA, after being presented with three options – liquidation, closure or restructuring – the ruling party decided that restructuring was the best way forward. SAA will in government’s hands, with the Treasury working to find it some funding – this comes after the airline was forced to cancel flight earlier this week to conserve cash. On the data front, local CPI edged up to 4% (in line with expectations) from 3.6% in November.

This morning, the dollar is trading mixed – losing ground to the safe-haven Japanese yen – after China put the entire city of Wuhan (population of 11 million) under lockdown to contain the spread of the deadly virus after the World Health Organization postponed making a decision on whether the virus is a global health emergency. The dollar gained ground on the euro ahead of the ECB interest rate decision due later today, while US President Donald Trump once again threatened to impose 25% tariffs on European cars if they fail to make a trade deal. In the UK, the pound edged up on the back of some positive data that increased speculation that the Bank of England may not cut rates next week.

In other markets, Asian stocks followed most global stocks lower as investor’s fears over the spread of the virus in China rose as millions prepare to travel for the Lunar New Year. Gold is slightly higher, while oil has edged lower.

On the radar...

  • EU – Interest Rate Decision
  • US – Jobless Claims

Did you know?

Napping for just six minutes can improve your memory and ability to learn, according to researchers from the University of Duesseldorf.

Have a great day

Nyiko

 

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