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ZAR: Rand withstands the SARB skipping a rate hike

In a mark of how far the mood in the FX market has changed, the South African rand only dropped around 0.5% on yesterday's decision from the South African Reserve Bank (SARB) to keep the policy rate unchanged at 8.25%. The market had widely expected a 25bp rate hike. Barely a few months ago a decision like this would have caused heavier losses for one of the most volatile emerging market FX pairs in USD/ZAR. The vote was close – three to two in favour of unchanged rates – but now the market thinks that the SARB has concluded its tightening cycle and will be easing policy in the first half of next year.

The fact that the rand did not sell off more shows that investors feel calmer about inflation prospects and increasingly like high-yield EMFX ahead of a possible cyclical dollar decline later this year. The rand of course has its challenges such as weak growth, a widening current account deficit, and the geopolitical headwinds of

Australian CPI Expected to Rise to 5.2%: Impact on AUD/USD and RBA's Rate Hike Dilemma

US Dollar (USD) Continues To Trump The EUR, BoE Expected To Increase Interest Rates, SNB Remains Dovish, South African Rand (ZAR) Performance

Rebecca Duthie Rebecca Duthie 29.04.2022 09:52
Summary: The US Dollar strengthens further. EUR/GBP investor sentiment has not changed regardless of the BoE’s expected announcement on interest rates. CHF weakens due to SNB dovish approach to monetary policy. A short look into the ZAR. The Euro has spent the past week trying to recover against the USD. Over the past week the Euro has been weakening against the USD. This comes from the continuous strengthening of the US Dollar, the hawkish Federal Reserve Bank (Fed) ended last week announcing they would push interest rates up for the 7th consecutive week in their fight against inflation. The Euro has been struggling to fight against the strengthening USD, the European Central Bank (ECB) has not tightened their monetary policy to fight inflation, because of the risk averse sentiment of investors in the current market, many are fleeing the Euro and turning to the stronger USD. However, since the market opened this morning, the EUR has slightly strengthened against the USD, whether or not this will continue is uncertain, the market sentiment is mixed for this currency pair. EUR/USD Price Chart Read next: Euro (EUR) Continues To Weaken Against The US Dollar (USD), Euro Under Pressure Amidst Russia’s Decision To Tighten Gas Supplies. GBP Strengthens Against the JPY.  GBP Weakens against the EURO during the past trading week. Since the market opened this morning, market sentiment for this currency pair is bullish, this means that investors are expecting the EUR to strengthen against the GBP. Over the past week, the overall trend is showing the EURO strengthening against the GBP, however, the rise of the EUR has not been smooth, the chart below shows the volatility this currency pair has felt this week. The Bank of England (BoE) is expected to announce a rise in interest rates on Thursday in the fight against inflation, perhaps the GBP will start to see some strengthening against the EURO. EUR/GBP Price Chart Swiss National Bank As of the market open this morning the CHF has strengthened against the USD, however, the market sentiment for this currency pair is showing bullish signals. Over the past week the USD has been strengthening consistently against the CHF. As the Fed continues their hawkish approach to the fight against inflation through tightening monetary policy, the US Dollar continues to trump most of its currency counterparts. The Swiss National Bank (SNB) believes this rise in inflation is only temporary and continues to stand by their loose monetary policy stance. USD/CHF Price Chart South African Rand (ZAR) weakens against the USD. The ZAR is the National Currency of South Africa and is used by Swaziland, Namibia and Lesotho, in general the ZAR tends to strengthen when investors are willing to take on more risk in developing countries' economies. Given the current economic pullback, the ZAR has been weakening against the current aggressively strengthening US Dollar. USD/ZAR Price Chart Read next: EUR/USD Drops Below 1.07?!, GBP Weakens Against the EUR For The Third Consecutive Month, SNB Showing No Sign Of Tightening Monetary Policy  Sources: Finance.yahoo.com, poundsterlinglive.com, dailyfx.com.
Saxo Bank Podcast: Natural Gas On Colder Weather, Wheat And Coffee Under Pressure, JPY Weaker And More

Platinum Futures, Efforts To Slow Gas Prices Continue, Wheat Futures Down 6%

Rebecca Duthie Rebecca Duthie 02.11.2022 16:34
Summary: Platinum futures are down 1.11% during 2022. Russia declared that, once its requests have been satisfied by Ukrainian counterparts, it is willing to continue the trade agreement that ensures a safe passageway for grain-carrying vessels. EU efforts to lower high energy prices are slowing down the adoption of renewable energy. Platinum Futures According to trading on a contract for difference (CFD) that monitors the benchmark market for this commodity, platinum has dropped 10.67 USD/t oz. or 1.11% since the start of 2022. Platinum Jan ‘23 Futures Price Chart Wheat futures fell 6% on Wednesday Following news that trade for ships transporting grain out of Ukrainian Black Sea ports may resume operations, Chicago wheat futures plunged more than 6% to $8.5 per bushel on Wednesday, dropping considerably from the three-week high of $9 reached the prior session. Russia declared that, once its requests have been satisfied by Ukrainian counterparts, it is willing to continue the trade agreement that ensures a safe passageway for grain-carrying vessels. The action was taken after Moscow abruptly chose to terminate the agreement's participation at the end of October, citing security concerns that Kyiv refuted. The continuance of shipments from Ukraine will boost global supplies in addition to freeing up essential storage space for the upcoming harvest, increasing concerns about a global food crisis that drove wheat prices to a record-high $12.8 in May. Prior to February's Russian invasion of Ukraine, sales from both nations made up about 30% of all exports. Wheat Futures Price Chart RBOB Gasoline futures The CEO of one of the biggest wind turbine manufacturers in the world cautioned that EU efforts to lower high energy prices are slowing down the adoption of renewable energy just as the area wants to boost it up. “Every indication is that the EU and governments have spent more time in finding taxation methods or trying to limit energy prices, which has actually slowed the process and project accruals,” Henrik Andersen, chief executive of Danish wind turbine manufacturer Vestas, told the Financial Times. In an effort to slow the growth in energy costs across Europe brought on by high gas prices, European energy ministers decided in September to set a $180 per megawatt-hour cap on earnings from the production of wind, solar, and nuclear energy. RBOB Gasoline Dec ‘22 Futures Price Chart Sources: finance.yahoo.com, ft.com, tradingeconomics.com
Impact of Declining Confidence: Italian Business Sentiment in August

FX Daily: A key day for debt-limit negotiations

ING Economics ING Economics 16.05.2023 09:55
President Biden and Speaker McCarthy are expected to hold another round of key debt ceiling negotiations today. Some are eyeing this as the last real chance to break the impasse, and given the high risk that no tangible progress is made, upside risks for safe havens (USD and JPY) are elevated today. In the UK, a small decline in wage growth is hitting the pound Republican Speaker of the House Kevin McCarthy is expected to meet with President Biden today to discuss the debt limit USD: Last real chance to make progress on the debt ceiling? The dollar has started the week on the soft side as risk sentiment enjoyed some stabilisation and the FX market followed a playbook risk on dynamics, with safe havens under pressure and commodity currencies strengthening. Within this last group, we are keeping a close eye on AUD this week. The Reserve Bank of Australia (RBA) minutes opened the door to more tightening if necessary, and tomorrow we’ll see the first quarter wage price index in Australia, which is expected to rise from 3.3% to 3.6% year-on-year. Any upside surprise may prompt some bets on further tightening by the RBA, and offer some support to AUD: at the moment, markets are not expecting any more hikes. On Thursday, April employment figures will also be released and could confirm a still very tight jobs market. Back to the US, this should be another pivotal day in Washington for debt ceiling negotiations, with President Joe Biden expected to meet Speaker of the House Kevin McCarthy. While Biden expressed some optimism during the weekend, McCarthy said yesterday that the two sides were still far apart after staff-level talks. He also said that a deal should probably be reached by the end of this week to have a realistic timeline to pass it in both houses. Biden is still scheduled to leave for the G7 meeting in Japan tomorrow, and the White House has so far said there are no plans to curtail the trip for the debt ceiling impasse. Should we see no progress towards a debt-limit deal today, we could definitely see markets price a greater deal of the US defaulting on its debt. The potentially very negative spill-over into risk sentiment and money markets means that the upside risks for the dollar and the yen are quite significant in such a scenario. On the data side, retail sales and industrial production will be in focus in the US today. Strong auto sales should have helped lift retail sales in April, but outside of this component, credit card figures point to very modest growth on most items. Industrial production should be held back by lower energy prices limiting the upside for oil and gas extraction. Finally, we’ll hear from FOMC members Loretta Mester, Michael Barr, John Williams, Austan Goolsbee and Lorie Logan. Yesterday, Neel Kashkari tried to push a hawkish rhetoric forward, suggesting the Fed probably has more work to do in its inflation battle.    Francesco Pesole Read next: Asia morning bites - 16.05.2023| FXMAG.COM EUR: Watch the pivotal 1.0800 level This morning, we’ll have the only potential market-moving data release out of the eurozone this week: the German ZEW surveys. Consensus is leaning towards a pessimistic read, with the expectations index falling again below zero and the “current situation” index declining from -32.5 to -37.0. Still, the market impact shouldn’t be very material barring a sizeable deviation from consensus. On the ECB side, President Christine Lagarde will participate in an event this afternoon but may not touch upon monetary policy. EUR/USD should remain primarily driven by the USD leg and the US debt-limit saga: we see 1.0800 as the key benchmark support, and a break below that level would probably signal a significant deterioration in market sentiment. Francesco Pesole GBP: Start of longer-lasting rise in EUR/GBP After last month's unexpected surge in the level of UK average pay, the growth rate on a monthly basis slowed once again. Averaging out recent volatility, the change over the past three months relative to the month before was 6.3% annualised, still too elevated, but lower than what we had seen throughout most of 2022. Incidentally, Bank of England surveys suggest that wage growth has peaked. With the BoE having put a lot of weight on this release, as well as the next CPI print, the chances of a pause at the June meeting have slightly increased. The price action in the pound this morning is mirroring this: EURGBP has broken back above 0.8700 and we think there is still ample upside room as further BoE tightening is priced out of the Sonia curve. Francesco Pesole ZAR: Fracturing along geopolitical lines After last year’s Russian invasion of Ukraine, the fear in FX markets was always that currency trends could fracture by geopolitical groupings. For example, outside of the Russian ruble, would the currencies of the other BRICS nations be treated differently by international investors? The neutrality on the war expressed by the likes of Brazil, India and South Africa was certainly noted, but events took a decisive turn in South Africa last week. Here, the US ambassador to South Africa accused the country of shipping arms (or allowing the shipment of arms) to Russia last December. USD/ZAR traded to a new record high on the news, with investors fearful that South Africa could lose access to various US trade incentives. The US ambassador has since backtracked on those comments – although it is unclear whether the accusation still stands. It will probably be hard to put this particular genie back in the bottle anytime soon. And even though we think a broad dollar bear trend will carry USD/ZAR lower later this year, in the nearer term – a febrile environment suggests USD/ZAR may challenge 20.00. Chris Turner Read this article on THINK Tags Yen FX Dollar Debt ceiling Disclaimer This publication has been prepared by ING solely for information purposes irrespective of a particular user's means, financial situation or investment objectives. The information does not constitute investment recommendation, and nor is it investment, legal or tax advice or an offer or solicitation to purchase or sell any financial instrument. Read more

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