Lehumo Capital

29/01/2018

WEEK AHEAD....US JOBS REPORT & FED MEETING TO KEEP THE DOLLAR ON THE SPOTLIGHT

The economic calendar in the coming seven days will be very busy with a number of data releases and the Fed’s first monetary policy meeting of the year.

The US employment report will be the data highlight of the week followed by the euro zone preliminary GDP data for the final quarter of 2017.

The January jobs report out on Friday should shed more light about the state of the US labour market.

Nonfarm payrolls likely accelerated from 148k to 178k in January.

The jobless rate is expected to stay unchanged at 4.1% but growth in average hourly earnings could quicken to 2.7% in January from 2.5%, with the month-on-month rate is forecast to hold at 0.3%.

Among Friday’s data, the other notable release will be the ISM manufacturing PMI, which is expected to fall slightly to 59.0, as well as December’s factory orders.

PMI figures out of the UK and China, and Australian CPI numbers will also be important.

The Australian dollar could re-test this week’s 4½-month high of $0.8118 should the coming data be better than the forecasts.

The Australian dollar has rallied over 3.5% versus the US dollar so far in 2018, though the gains have mainly been driven by a weaker dollar and strong risk appetite than any convincing signs that Australian inflation is on the up.

Quarterly CPI data due on Wednesday could change this picture however as the annual headline rate is forecast to accelerate to 2% in the December quarter, from 1.8% previously.

Also due on Wednesday are figures on private sector lending for December, while Thursday’s building approvals are also likely to grab some attention.

The Australian dollar could re-test this week’s 4½-month high of $0.8118 should the incoming data top the forecasts.

Kgomotso Mohajane:

25/01/2018

Factors to Look Out for Influencing the Strengthening of the Rand !!!!

The Rand (ZAR), currently trading at R12.89 reached as low as R12.82/$ during early morning trade today.

This is a remarkable recovery as everyone seemed to think it is due to Cyril Ramaphosa being elected ANC President, but the reality is rather more surprising.

There are 3 major forces that drive the ZAR/$ :-

1. Dollar strength/weakness
2. Commodities market
3. Emerging market/SA sentiment

The USD has weakened significantly against its major trading partner currencies as shown below. It’s very easy to see by eye that the USD Index and the ZAR/$ are almost perfectly inversely correlated.

When the USD weakens, the ZAR strengthens and vice versa. It is our view that the bulk of the ZAR strengthening we are seeing now is as a result of the USD Index weakening - which has absolutely nothing to do with local affairs.

Trading Range to Exploit :-

R11.80 - R12.30

-There is a very strong resistance level @ R12.30 with a view to short back down to a very strong support level @ R11.80

***When trading this range make sure there are no major fundamental data coming out of the U.S. economy.

23/01/2018

Oil Rises on IMF world growth outlook................

Oil prices rose on Tuesday, lifted by healthy world economic growth prospects and production curbs by OPEC, Russia and their allies.

Brent crude futures were up 67 cents at $69.70 a barrel at 14:01, not far off the three-year high of $70.37 reached on Jan.15.

U.S. West Texas Intermediate (WTI) crude futures rose 60 cents to $64.17 a barrel. WTI reached its highest since December 2014 on Jan. 16 at $64.89.

The International Monetary Fund on Monday revised upward its forecast for world economic growth to 3.9 percent for 2018 and 2019, a 0.2 percentage point increase from its last update in October.

The outlook for 2018 is roughly balanced for most of the year, but inventories are set to rise in Q4 2018,

The oil price in 2018 had risen by $10 a barrel, expecting an average of $60 and Brent @ $65.

The demand growth comes at a time of supply curbs by the Organization of the Petroleum Exporting Countries, Russia and other producers, which began in January 2017 and are due to run until the end of 2018.

OPEC's main objective for the cuts is to eliminate a global surplus in oil stocks and re-balance the market.

But there have been signs of a possible price correction.

Expect Brent to average $60 this year, $5 above its previous forecast, due to strong demand growth and falling output from OPEC member Venezuela.

Trade range short term :-

• $65 - $70 – be careful of the US energy sector performance, when trading against the dollar.

Compiled by:- Kgomotso Mohajane

18/01/2018

Where to For Bitcoin in 2018 ???

Bitcoin’s swings in early 2018 has investors, regulators and onlookers debating whether the speculative bubble has popped after a 1 400% ascent last year.

The roller coaster January for cryptocurrency investors showed no signs of ending today as Bitcoin retraced back to a loss just hours after staging a recovery above the $10 000 mark.

It was down 2.4% to $11 107 at 9:07 a.m. and it held steady for much of the Asia trading day as investors took a breath following a frantic 24 hours in which it swung through a trading range of $2 600.

This market is very volatile at the moment and there is not enough capital in it to stabilise.

While it staging multiple comebacks in 2017 following double-digit losses, the digital coin has not been able to string together a proper rally through the first three weeks of this year.

Cryptocurrencies across the board are coming under increasing scrutiny from regulators around the world, with South Korean authorities debating a potential ban on local exchanges while China is widening its crackdown on the industry.

Bixin, one of China’s larger operators for the so-called wallets that hold digital coins, said it was suspending all OTC trading, blaming “uncertainties regarding regulation policies.”

No re-start date was set.

Compiled by:- Kgomotso Mohajane

With Bitcoin swings being so volatile, exercise caution when attempting to go long or short the pair!!!!!

For proper levels contact me on 0786515448 !!!

15/12/2017

What Happens to the Rand after a Ramaphosa or Dlamini-Zuma win Over the Weekend????

The Rand has been trading within a range of 13.28 – 13.50, ahead of the ruling African National Congress party conference to elect a new leader.

Rand traders haven’t been this nervous since the global financial crisis.

Just a day before the ruling ANC elects a leader to replace President Jacob Zuma as party head, the Rand’s volatility against the Dollar has shot up to levels last seen in 2008.

The measure, based on options to buy or sell the currency, suggests traders are preparing for big price swings, depending on the outcome of the leadership battle.

A win for Cyril Ramaphosa, who built a multi-million rand business empire before becoming the party’s deputy president,is favorite among businesses, companies and economists, is seen to be the most market-friendly and could spark a Rand rally to below R13/$, a level last seen in September

On the other hand, if Dlamini-Zuma is seen as the preferred candidate of Zuma, and expected to continue his legacy of rent extraction, cadre deployment and networks of patronage, business leaders expect the Rand to weaken by between R1.00 and R2.00 to the Dollar.

This view is shared among both local and foreign businesses – though foreign businesses are more optimistic about the rand under Ramaphosa.

Happy Trading All.........

Compiled by :- Kgomotso Mohajane

29/11/2017

Rand Eases as Investors Take Profits........

The Rand weakened this morning, stopping an advance that has seen it march to a one -and-a-half month best, as investors took profits on a rally sparked by bets of a business-friendly outcome to the ruling party’s leadership battle.

The Rand slipped 0.07% to 13.65 to the dollar, shy of the 13.56 high touched in the previous session.

It is currently trading at 13.63 to the Dollar, marginally stronger than the early morning session.

Emerging market currencies were hit by the US Federal Reserve chair nominee Jerome Powell signalling the central bank was likely to raise interest rates again next month, boosting demand for the Dollar.

Trade Idea :-

BUY @13.56 support level to 13.67 resistance level as take profit;

HAPPY TRADING TO ALL............

Compiled By :- Kgomotso Mohajane.

28/11/2017

South African Rand Resilient Against The Dollar!!!!!!

The Rand is living up to its reputation as the world’s most volatile currency.

Having dealt what should have been a crippling blow by S&P Global Ratings on Friday, sparking a 2% slump, the currency advanced as much as 3.3% on Monday, tracking its best day since December 2015, after Moody’s Investors Service retained its investment-grade rating on the nation’s local-currency debt.

The result by Moody’s meant South Africa retains its position in Citigroup’s World Government Bond Index for now, even though the company said it may cut the assessment after the February budget.

An exit from the index would spark forced selling of local bonds by investors that track the gauge, leading to outflows of much as $10 billion, according to Societe Generale.

The Rand was also helped by news that President Jacob Zuma had committed to fiscal responsibility, vowing to cut spending and raise taxes to plug a R40 billion ($2.9 billion) budget gap.

The currency strengthened by 3.2% to 13.71 to the dollar and currently trading slightly weaker at 13.74 to the Dollar.

Possible Trading Ranges to Exploit :- 13.66 – 13.83

Bull Run:-

Buy @ 13.66 support level :- Set Take profit level @ 13.77

Wait for a clear break out @ 13.78 resistance level then Buy for a take profit target of 13.83.

Bearish Run :-

Wait for a reversal at 13.78 resistance level (confirm with indicators), Sell down to 13.66 support level.

Compiled by :- Kgomotso Mohajane

24/11/2017

Stern Test For The Rand Ahead of Ratings Rankings........

Already under pressure by political and budget troubles, the Rand faces its next crucial test today when South Africa gets reviewed by two ratings companies.

S&P Global Ratings and Moody’s Investors Service are reviewing the country’s credit ratings and 9 of 16 economists surveyed expect S&P to deliver a cut to the nation’s domestic debt while four see a similar action by Moody’s.

The Rand weakened almost 6% against the Dollar since the end of June, the worst emerging-market performance after the Turkish lira.

October’s medium-term budget estimated a larger government deficit as well as slower economic growth.

Fitch Ratings affirmed South Africa’s debt rating at BB+ with a stable outlook on Thursday. The move provides South Africa with an opportunity to strive for an improved credit profile, the National Treasury said.

The Rand is at 13.93 to a dollar as of 10:43a.m. this morning, while the yield on the nation’s 10-year local debt was 9.35%.

Potential Rand reaction to a rating cut:-

Negative:-

A single downgrade would weaken Rand by between 30 cents and 40 cents.

An inconclusive ANC outcome in the December elections, downgrade by one agency and a stable global environment could see rand between 13.80 -14.50.

A ratings cut by both agencies could fuel a 100-cent slide.

A negative political scenario in December & a difficult global environment could see the Rand weaken to as much as 17.00 by year end.

Positive:-

If there’s no change in the credit ranking, the Rand could appreciate to 13.50

Given how bearish the market has already become in the run-up to the ratings today, a negative reaction may not be as large as what consensus is predicting & no downgrade could trigger a relief rally.

Moody’s is the more conservative of the two firms, if they decide to hold off on a downgrade for now, expect a neutral to mildly positive response.

A positive development at the ANC election conference in December, no downgrade and an upbeat global macro backdrop could see the Rand strengthen to 13.20 by year-end,

Compiled by:- Kgomotso Mohajane.

23/11/2017

USD / ZAR Trading Range....Ahead of Ratings Decisions!!!

At 15h:17 the Rand has weakened marginally to 0.86% to 13.87 to the Dollar. Having traded as firmly as 13.79 shortly after midnight.

Moves on the Rand have also been exaggerated by low volumes, as markets in the United States are winding down for the Thanksgiving holiday, keeping them closed until Monday.

13 of 25 economists surveyed said at least one of the major rating agencies would cut South Africa’s local currency debt to “junk status” in Friday’s review, resulting in a trigger of outflows from local bonds of more than R100 billion.

A cheaper Rand could be an attractive buy before the ruling African National Congress chooses a new leader at an election conference in December.

Possible trading range to exploit before the credit ratings decision on Friday for the USD/ZAR = 13.7985 (Buy) - 13.95 (Sell).

22/11/2017

Rand Firms Slightly after Mugabes’ Resignation.............

South Africa’s Rand held firmly against the Dollar in the early morning trade session, maintaining a level below the 14/$ mark breached, cutesy of a peaceful political transition in neighboring Zimbabwe.

The rand is currently firm at 13.91 from 13.9725 per dollar during the early morning session, compared with its overnight close of 13.9700. An intra-day trading range between 13.85 - 14.00 is to be expected.

Robert Mugabe resigned as Zimbabwe’s president on Tuesday, a week after the army and his former political allies moved to end four decades of rule.

In South Africa Investors are nervous ahead of the S&P Global Ratings and Moody’s reviews on Friday, 24th November.

Statistics South Africa will publish October CPI (consumer price index) data on Wednesday, while the South African Reserve Bank will announce its last interest rates decision for the year on Thursday.