What we can look forward to this trading week:
Moody’s downgraded South Africa’s local and foreign debt on Friday. This was far from being a surprise, and in fact we are quite pleased that South Africa did not get downgraded by two notches to sub-investment grade. The good news is our local currency seems to be doing well relative to major currency pairs despite that announcement. Moody’s outlook for SA is negative and if we don’t see improvements by December, they might just downgrade us again to sub-investment grade. The UK election managed to produce a surprise which saw the Tories losing their majority in parliament, this puts the Brexit talks scheduled to start in a week in jeopardy.
- Locally, it is a very thin week in terms of economic data releases. We are only expecting Retail Sales data on Wednesday and the impact of this data of late has been quite muted. Our focus will be on the Rand and commodity prices, as we expect that to be the main driver of price action in a week that will be a day short because of the holiday on Friday.
- On the international front, the major event to look out for is the US Fed rate decision on Wednesday. Bloomberg consensus is that the Fed will raise rates by 25 basis points to 1.25%. Expect some volatility in major FX pairs such as the EUR/USD, USD/JPY & GBP/USD regardless of the decision that is made on Wednesday. Should they increase rates as expected, we should see some strength in the US Dollar which has been under pressure of late.
- We are also expecting the Bank of England and the Bank of Japan to announce their rate decisions on Thursday & Friday respectively. The outlook for both of those decisions is that they will keep rates unchanged. Investors will be closely watching the Bank of England’s asset purchase policy for indications of how soon the bank will start winding down on the policy.
- Besides the rate decision from the world’s biggest central banks, we are expecting CPI & PPI data from the world’s biggest financial centres during the course of the week. The US is expected to release quite a bit of economic data between Wednesday & Thursday, including the weekly Crude Oil Inventories and Initial Jobless Claims.
- We will be keeping a close watch on events in the UK as Theresa May & her party try to find the way forward after a somewhat embarrassing election result for their party.
We will be keeping tabs on the markets. Check out our blog for market updates, insights from our GT247.com team, and our independent analysts. Not sure about a trade? Call the GT247.com Trading Desk on 087 940 6102, and bounce your idea off one of our dedicated traders.
Until next week, we wish you profitable trading!
Musa Makoni | Trading Specialist at GT247.com
