overview

This week major markets traded side-ways against the rand till Wednesday. The much anticipated Jackson Hole Economic Symposium started on Thursday and the comments of participants contributed to a lot of volatility in the market. The rand has so far strengthened against the USD, EURO and Pound but with FED Reserve Chair Jerome Powell having his speech today at the economic symposium, the rand may lose some strength against these major currencies..

u.s and sa markets

The U.S did not release any market moving data between Monday and Wednesday, and the USD/ZAR was consolidating (trading sideways with minimal volatility).

On Thursday, the U.S released their initial jobless claims and performed better than expected. Last weeks readings stood at 245,000 unemployment claims, and it was expected that this was to rise by 8,000 unemployment claims which would have been bad for the greenback, but instead it reduced 2000, bringing the unemployment claims down to 243,000 cases this week compared to last week. This should have boosted the dollar bulls, but the much anticipated Jackson Hole Symposium that started yesterday afternoon held more weight.

The Jackson Hole Economic Symposium is one of the longest standing central banking conferences in the world held in the U.S. At this 3 day event, participants discuss economic issues, implications and policy options. Of the 3 days, today is most important as US Federal Reserve Chairman Jerome Powell is set to share his remarks this afternoon. Powell is expected to correct market expectations. With spending and production indicators having softened, logically one would expect that Powell takes a dovish stance which caused the dollar to drop. Powell is likely to correct this perception with a more hawkish tone according to economists which will prevent emerging currencies from advancing further..

In South Africa, Eskom has stopped servicing certain areas in the country due to employees being harassed by surrounding communities when they are sent out to fix issues. Despite these woes, Eskom has come up with an upskilling initiative in conjunction with the Cape Peninsula University of Technology (CPUT) to re-train and upskill workers and relevant stakeholders at the Komati Power Station. In other news, Stats SA released a report earlier this week stating that the South African unemployment rate fell in the 2nd quarter to 33.90% compared to 34.50% in the 1st quarter of this year. Inflation continues to worsen digging deeper holes in consumers pockets as it topped at its highest level in 13 years, increasing in July by 0.4% to a total of 7.8%.

Technical:
The USD/ZAR pair had little movement at the beginning of the week from Monday to Wednesday, trading side-ways. Yesterday we had market moving news, the Jackson Hole Symposium, the comments of the officials pumped volume into the market and the pair was very volatile, with the dollar losing steam and falling from a daily high of R17.00/$ to a daily low of R16.71/$. Today we opened the market at R16.75/$. With that in mind, the pair may likely creep up to a possible daily high of R16.92/$.

european markets

An executive Board Member of the European Central Bank, Panetta had a speech on the 23rd of August 2022 and said that the Euro Zone heading into a recession would essentially mitigate inflationary pressures. He further mentioned that the ECB must exercise caution regarding further rate hikes as a recession looms. While the ECB has not said where rate hikes will stop, it noted that further normalization will be required, moving towards a neutral rate. Yesterday the ECB published their account of monetary policy meeting and it is said that the ECB may likely continue to raise their interest rates by 50 basis points at their next meeting as the upside risk of the inflation outlook had intensified in the short term.

Technical:
The EUR/ZAR has had a bearish week, with a weekly high being posted on Monday at R17.11/€ and falling to a weekly low of R16.66/€ as seen yesterday where the pair found support. Today we opened the market at R16.69/€ and we may likely see the Euro make up at least 50% of yesterday’s loses and rise to a possible daily high of R16.84/€.

uk markets

On Tuesday, the UK released weak composite and manufacturing PMI data. The Manufacturing PMI data fell from a 52.1% to 46% which is an indication that manufacturing industry is contracting. Living Costs in the UK continue to sky rocket and it has been reported that millions of households are soon to face a whooping 80% increase in their energy bill costs from October 2022, which will roughly raise the typical average bill per house hold to about GBP 3,549. With winter around the corner, households need to use more energy supply for heating, therefore this will be a rather difficult stage for consumers.

Technical:
Much like the USD, and EUR, the Pound Sterling has also weakened against the rand this week, having posted a weekly high of R20.19/£ on Monday to a weekly low of R19.76/£ seen yesterday. Today we opened the market at R19.80/£ and currently trading at a support level. Should the sterling gain more strength today, we may possibly see a high of R19.94/£ . Should the support level of R19.77/£ not hold next week, the sterling my fall to a low of R19.69/£ .