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Below you will find a daily finance and markets review provided by Rand Merchant Bank analysist John Cairns. This information is provided as a matter of interest to readers of this blog, should you be interested to receive further information and insight you may register through RMB directly. Thanks, Ed

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Date: 30th June 2009

Please find your currency daily attached.

WHAT TO WATCH TODAY:
- SA M3 money supply at 8:00
- SA Private sector credit at 8:00
- UK GDP at 10:30
- SA Consumer confidence at 12:00
- SA Trade balance at 14:00
- US Consumer confidence at 16:00

TODAY’S EXPECTED RANGES:
- USD/ZAR: 7.70 – 7.90
- EUR/ZAR: 10.90 – 11.15

A STRONG ZAR COCKTAIL
USD/ZAR continues to prosper around 7.80, gaining support from its major short-term determinants. The overnight performance of EUR/USD, US equities and gold have bolstered the ZAR, opening the door for further gains. A repatriation of export earnings and a favourable interest rate differential could have also contributed to the ZAR’s phenomenal performance over the last few days. We expect the unit to trade within a tight range of 7.70 – 7-90 today, as investors tread cautiously ahead of the US non-farm payrolls data on Thursday.

We are spoilt for choice on the local data front with M3 money supply, PSCE, trade data as well as consumer confidence figures out today. While the ZAR is generally immune to local data, the trade balance might generate a response. Keeping in mind that monthly trade data is rather unpredictable, we expect the balance to reflect a continued deterioration in export volumes and a slight moderation in imports. However, the volatility in the oil price is likely to have exacerbated import prices and hence widened the trade deficit for the month. A worse than expected outcome could possibly slow the ZAR’s current momentum.

THE CROSSES:
- EUR/ZAR is receiving considerable support from EUR/USD, and is likely to trade below 11.00 today.
- GDP/USD is surging ahead to 1.68 allowing GBP/ZAR to trade below 13.00.
- Despite USD/JPY’s stability around the 95 level, ZAR/JPY is extremely volatile due to the significant strengthening in the ZAR.

OTHER NEWS
- The competition commission is investigating five of SA’s biggest retailers over concerns of possible anti-competitive behaviour.
- Russia’s Prime Minister has urged state banks to boost lending by up to US$16bn to provide support to the economy which has been adversely affected by falling commodity prices and a lack of international credit.
- Euro-zone economic confidence recovered more than expected in June, despite idle capacity in the industrial sector reaching a record high.
- The Bank for International Settlement has come out in strong support of global financial reforms which would amongst other things, limit bilateral trading between banks.
- Growth in demand for credit by SA’s private sector slowed to 5.7% y/y in May.

Today’s daily was written by Nema Ramkhelawan.

Kind Regards

John Cairns and Nema Ramkhelawan
Financial Markets Research: Currency
Fixed Income, Currency and Commodities (FICC)
Rand Merchant Bank, a division of FirstRand Bank Limited

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