Markets Update with TreasuryONE

ECB hikes and warns of slowdown As we expected, the ECB hiked interest rates by 75 basis points. Although the initial reaction to the news was muted, the press conference held by ECB President Christine Lagarde did move the markets. The ECB noted that more rate hikes are forthcoming as battling inflation is key; however, the hiking of interest rates and high energy costs will cause growth to slow...

US Dollar is still King The US dollar has been the direction giver for the market in the last couple of weeks and today was no different. We have seen the US dollar trading below 0.99 against the Euro as the market is turning more risk averse every day and moving into the US dollar. This risk aversion has meant that the Rand has again touched a new high this year of R17.46, and we expect that high...

The dollar is still the main driver We spoke yesterday about the dollar markets being closed for Labour Day, and we have seen an increase in momentum for the dollar this afternoon as recession fears continue to rise. The dollar has been on the front foot for the most part of the day, breaking below 0.99 against the Euro to trade as low as 0.9865 earlier. This volatility did spill over into the loc...

In early morning trade, we saw the Rand touch R17.42 as the contagion effect of a stronger US dollar in evening trade on Friday still washed through the market. The Rand reacted to the US dollar, hitting 0.9879 against the Euro, which has since reversed a little bit, with the US dollar now trading at 0.9927 against the Euro. The Rand has retreated back to the R17.20 level but is not out of the woo...

ISM Data boosts the dollar ISM Manufacturing data for PMI and New orders came out better than expected and gave the dollar fresh momentum. Since the data release, the pound traded close to 1.15 against the dollar, the euro trading closer to the 0.99 level, while the JPY traded above 140 for the first time since 1998. The dollar index is trading at 109.80, while the 2yr US Treasury yield is quoted...

Risk aversion is still in focus The Rand and other EM's are still under pressure as there is still some wash-through of risk aversion with recession fears still abound. The recession fears will only grow stronger with each Fed meeting where a hawkish tone is struck, and more rate hikes are in the offing. We did see the Rand break above the R17.00 level against the US dollar in afternoon trade and...

Dollar still marching The waves the ECB made with talks about a 75-bps hike next week only lasted a short while. The dollar turns around at the start of the US session, with the Euro trading below parity again. The European political players also want to intervene in the power markets. Will this be a game changer? We have seen some of the energy prices come back from its elevated levels, but what...

Currency update Bullish sentiment on the dollar has eased during the day, and we see the rand and other currencies trading on the front foot this afternoon, with the dollar index back below 109. Overnight the rand rallied from Friday’s close to the higher R16.90’s but has tracked lower during the course of the day and aiming at a close below R16.85. The euro is up 0.6% at the moment and back above...

Powell speech at Jackson Hole After waiting the whole week for Jerome Powell's speech at Jackson Hole, the market got a whole 7-minute speech which only reiterated the Fed's mantra that its monetary policy will be data-driven going forward. We have seen markets struggling to digest the short speech by Fed Chair Powell, with the Rand trading quite wildly in a 10-cent range after the speech. The US...

TreasuryONE Market Wrap - 25 Aug 2022

BASELINE VIEW - PRECIOUS METALS: Gold will remain focused on the movements in the dollar and US treasuries for short term trading bias. Investors with a longer-term outlook will favour accumulating on any dips as a hedge against both the geopolitical and macro-economic risks. The noble group metals have the slowdown in the global economy and supply constraints playing tug of war with price action....

The ZAR has performed impressively this year, and that performance has been characterised by strong ZAR sentiment, attractive carry, fundamental resilience, and a fundamentally undervalued ZAR. Three months of appreciation later, and the ZAR is now overvalued, but is that enough to imply that a reversal is automatically guaranteed?

ZAR resilience could extend a little longer

Heading into the March 24 SARB MPC meeting, we expect the SARB to deliver a third consecutive 25bps rate hike as policymakers look to rein in inflation expectations, which have surged on the back of soaring commodity prices, particularly food and oil.

Welcome to the first webinar for 2022.

BASELINE VIEW PRECIOUS METALS: Gold remains underpinned by the geopolitical tensions brewing in Eastern Europe coupled with the longer-term fears surrounding a sustained period of high inflation globally. The topside has been capped by thoughts of the US Federal Reserve tightening monetary policy, which has boosted US Treasury Yields raising the opportunity cost of holding gold as it generates no...

Bottom Line: In line with expectations, the SARB hiked for the second consecutive meeting, and all indications are that this is the start of a trend that will persist throughout the year. Only if the data begins to soften will the SARB reassess the economic outlook in favour of pausing; however, there is much to take into consideration. Internationally, central banks around the world are hiking, a...

Local and global risks portend to a potentially volatile first quarter: Bottom Line: • From an international standpoint, risks facing the ZAR remain elevated even if these risks look a bit different to what they did in recent quarters. The world is moving away from the pandemic, and market focus has shifted towards what the global economy will look like going forward. This means monetary policy no...