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Closing the loop 19 September 2022

Closing the loop

Shireen Darmalingam

Market highlights:

  • The rand is weaker at R17.72/$ (R17.61/$*) today; it ranged between R17.60/$ and R17.79/$.
  • The currency is above its 50-day, 100-day and 200-day moving averages (R16.94/$, R16.45/$ and R15.86/$).
  • EM currencies are mixed today; the HUF (+0.8%), COP (+0.3%) and THB (+0.2%) are the biggest gainers; the ZAR (-0.6%), ARS (-0.6%) and RON (-0.4%) are the biggest losers.
  • Japan’s August CPI print is on the cards tomorrow; CPI is expected to have increased to 2.9% y/y in August from 2.5% y/y in July.
  • Higher prices of food and energy (excluding gasoline) are expected to have been the main drivers of the pickup in inflation in August.
  • Other sources of upward pressure include mobile phone charges due to a lower year-earlier comparison.
  • Core CPI is expected to have increased to 1.5% y/y in August from 1.2% y/y in July.
  • Prices excluding fresh food are also expected to have accelerated in August.
  • An above-target CPI print, however, will unlikely sway the BOJ to shift policy this week.  
  • The central bank has indicated that it is keeping an eye on signs of faster wage growth that would help sustain inflation before it reduces stimulus.
  • The BOJ convenes on Wednesday to decide on rates.
  • The Swedish Riksbank meets tomorrow and will likely continue raising rates.
  • This is expected as headline and core inflation set multi-decade highs recently.
  • The central bank is likely to hike rates by 75 bps and by another 75 bps in November; this follows a 50 bps rate hike in July. 
  • Locally, it was a quiet day as far as data releases were concerned.
  • The SARB’s leading indicator for July is scheduled for release tomorrow; the index increased to 125.2 in June from 124.7 in May.
  • Eskom continues with Stage 6 loadshedding this evening; loadshedding will be reduced to Stage 5 at midnight.  
  • The rand weakened to an intra-day high of R17.97/$ today on the back of the severe power cuts.
  • The oil price is down by 0.7% today, and up by 16.7% in the year-to-date.   
  • The gold price is down by 0.5% today, and down by 8.9% in the year-to-date.
  • Brent crude oil is at $90.70/bbl ($91.35/bbl*).
  • Gold price is at $1667/oz ($1675/oz*). 
  • SA CDS is at 276bps (278bps*), Brazil 248bps (248bps*), Turkey 747bps (749bps*).
  • Yields: US 10yr at 3.49% (3.44%*), German bund at 1.80% (1.75%*) and SA 10-year generic at 10.91% (10.81%*), SA’s R186 is at 9.05% (8.98%*).
  • The JSE ALSI is down by 0.6% today (-1.5%*).

* Denotes Friday’s close. 

Key events and data:

  • 01h30: Japan CPI (August)
  • 09h00: SA leading indicator (July)
  • 10h00: Eurozone current account (July)
  • 14h30: US housing starts, building permits (July)

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