The USD market has not had much economic data release this week. On Wednesday, the U.S had their JOLTs Job Openings, which measures job vacancies in the U.S. A reading that is stronger than forecasted is generally supportive for the USD, while a weaker than forecasted reading is generally negative for the USD. It was forecasted that there were 11 million job openings, but actual readings showed that there 11.254 million job openings for the month of June. This data helped pushed the dollar up. The FED had their FOMC Meeting Minutes on Wednesday at 20:00 SA time, and noted that the economic outlook warrants moving to a “restrictive stance of policy” provided that inflation pressures do not cool down. On Thursday, the U.S released their weekly initial jobless claims, and it shows that 5000 more jobless claims were filed in the past week than forecasted. Generally when the reading is higher than expected, it is usually negative for the dollar. This reading usually gives us an indication of how the Non-Farm Payrolls (being released today at 14:30) will perform. It is expected that the Non-Farm Payrolls will drop from 390,000 to 240,000. Should the data be lower than expected, the USD should lose strength and allow the rand breathing ground to strengthen. The market will be very volatile when the data is released, therefore clients should brace for volatility.

Locally, South Africa has been in the dark for most hours of the day during this week, this follows after workers went on to strike regarding their wages. Eventually Eskom came to an agreement with unions to increase the Eskom wages by 7% and workers have now returned to work. This had a heavy knock on effect on the supply of electricity as South Africa was placed on Stage 6 of loadshedding. Today it is expected that we will experience Stage 2 to Stage 4 of load shedding. President Cyril Ramaphosa has approved a USD 8.5 billion plan to help move the country from the use of coal energy to produce electricity, and to explore the use of more natural energy sources. Ratings Agency, Fitch has kept the outlook for South Africa as stable at level BB- rating.

Technical

The greenback has been on a bullish streak this week, rising from a weekly low of R16.22/$ rising to a high of R16.89/$. The new major support level is R16.30/$. The pair has been painting bullish flags on the charts all week, pushing the dollar up all week. Today we opened at R16.75/$, with R17.00/$ looming, we may expect to see this as the new resistance level for next week.

Range for next week: R16.65 – R17.00

Best Buy today: R16.83

European Markets

The EuroZone’s market is facing a fast approaching recession, and it seems that this will occur whether Russian energy supplies are cut off completely or not. A very bad economic shock will make it extremely difficult for the European Central Bank (ECB) to tighten their monetary policy aggressively, thus widening the rate differential with the United States. The ECB is likely to only raise interest rates by a total of 100 basis point by year end, and they are being very cautious with hiking rates as aggressively as the U.S has been. With this said, it is possible that the Euro Zone may even put rate hikes on hold for 2023. ECB President Lagarde is set to speak today at 13:55 SA time, and is likely to touch up on their rate hike expectations coming up and the overall economic outlook.

Technical

The EURZAR has been trading in an upward channel this week, as the rand showed weakness across the board. We saw a weekly low of R16.86 and high of R17.17 this week. Should the pair continue to respect this upward channel, we should expect to see further EUR strength and test highs of R17.20 next week.

UK Markets

The biggest news to hit the UK this week is the resignation of the UK Prime Minister, Boris Johnson. Johnson resigned as the Conservative Party leader yesterday, finally giving in to the calls for him to step down. Johnson expressed that he was not happy about resigning “from the best job in the world”, but he is hoping to stay in office until the Autumn while a leadership contest takes place to replace him.

Technical

Despite all the UK Political woes that occurred this week, the Pound Sterling prevailed against the rand. The weekly low was R19.65 and the pair rising to a high of R20.18. The pair is trading within an upward channel, and we can expect the GBP to hit a high of R20.28 next week.