October 18, 2021

Currency News

MyCURRENCY News | Week 42

MyCURRENCY News | Week 42

What we know

 

The past week saw the Rand steadily grind its way stronger against the USD, closing the week at ±2% stronger. This was buoyed by a general risk on sentiment and a resultant rally in emerging markets throughout the week.

It was a bit of a mixed week locally; mining production growth showed signs of easing overall as it missed forecasts, while conversely retail sales and manufacturing exceeded expectations – much of a muchness in the end as it left the Rand’s performance in line with the rest of the EM basket. Otherwise, we quite look forward to the arrival of summer and the end of loadshedding. Our obligatory candlelit dinners thanks to wet coal will be sorely missed…

Concerns are growing around the 5th wave of Covid in the US as Fauci raises the issue of 60 million odd citizens that remain unvaccinated. That translates to 57% of the population being fully vaccinated, and if that is considered sub-par, I strongly suggest they don’t gander at our mere 35% as they might choke on their doughnut.

We have seen the vaccination growth rate stagnate over the last month in SA. The best-case scenario at present would be if the vaccination rate stayed constant at 1 million per week. This would mean it would take us another 6 months to vaccinate the remaining eligible 26 million people. Unfortunately, reality is often far more disappointing – declining efficiencies and the requirement for booster shots along with a slower than hoped for adoption rate might leave SA susceptible to a drawn-out recovery period.

 

What others say

 

News24 – A further 43 municipalities on the brink of collapse, shows new News24 index

While South Africans are heading to the ballot box for municipal elections on 1 November, News24’s Out of Order index, calculated from a set of data painstakingly collated over the last two months by a News24 team, suggests that the crisis in the frontline of service delivery is likely to deepen.

Reuters – China’s economy stumbles on power crunch, property woes

China’s economy hit its slowest pace of growth in a year in the third quarter, hurt by power shortages, supply chain bottlenecks and major wobbles in the property market and raising pressure on policymakers to do more to prop up the faltering recovery.

Visual Capitalist– Comparing Tesla’s spending on R&D and Marketing per car to other automakers

It’s often said that word of mouth is the best form of advertising. In the case of Tesla and their rapid ascent to the top of the global automobile business, this might be true.”

 

What we think

 

The dollar index (DXY) has retraced from its lows and has been dancing around its previous highs set in late September of 94.50. The DXY pushed lower during the 3rd wave, Biden’s presidential win, and the subsequent quantitative easing. A breakthrough above 95.00 could be on the cards if the Fed gives some finality later this month on tapering.

This week, however, leaves us somewhat empty-handed with regards to news events; US Fed members speak early this week with SA inflation out on Wednesday and the US Philly Manufacturing out on Thursday. The EM basket is currently treading water leading into this week as Chinese GDP missed and dampens expectations for the rest of the week and will likely lead to a swing towards more risk neutral sentiment globally. We therefore anticipate the Rand to bleed off some of its recent gains as importers take a bite out of the apple.

Our range for the week is 14.60 – 14.95.

 


Have a great week!