SOUTH AFRICA: GNU Parties Keep Wrangling Over Budget As Deadline Looms Large
Mar-07 07:28
- The rand gained for the third consecutive day on Thursday, printing its best levels versus the greenback since mid-December, with USD/ZAR testing its 200-DMA. The move was facilitated by broad-based US dollar weakness, although the rand was among the best performers in the EMEA FX space.
- The Mail & Guardian described the budget situation as "down to the wire" as "any VAT increase is probably off the table," with Finance Minister Enoch Godongwana rushing to finalise the revised spending plan by March 10 and deliver it in parliament on March 12. The Financial Times reported that coalition parties remained at loggerheads, with sources telling the outlet that the budget is "by no means a done deal" and heated negotiations are ongoing, despite public assurances from the Presidency.
- The government confirmed that Ukrainian President Volodymyr Zelensky will arrive in South Africa for a state visit on April 10 in response to President Cyril Ramaphosa's invitation extended in mid-January. South Africa has been trying to portray itself as a neutral third party, which could play the role of a peace broker amid Russia's ongoing invasion of Ukraine.
- Health Minister Aaron Motsoaledi said that the government may not be able to fill the gap left after the termination of USAID programmes, especially when it comes to research and related activities. Separately, Foreign Minister Ronald Lamola said that US President Trump had "every right" to cut aid and South Africa should seek to reduce its dependence on wealthy nations.
- The National Treasury sells linkers at an auction today.
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BUNDS: Another busy overnight session
Feb-05 07:25
- It is another relatively busy overnight session for Bund, with elevated volumes in {us} US Tnotes and the German contract going into the European session.
- Risk remains tilted to the upside for the German Bond on growth concerns in Europe, as well as Technically.
- Bund is now eyeing 133.58, Monday's quick/ fast market high printed on Monday, but better will now be seen at 2.30% in Yield terms.
- The German 10yr Yield printed at 133.86 high, with a 2.309% low on the 2nd January.
- Today sees Services PMIs, but final readings for the major developed countries, so should be taking a back seat.
- Focus will be on the US ISM services, while US ADP is also due.
- US Quarterly refunding will garner interest as well.
- SUPPLY: Gilt 2053 £2bn (Equates to 19.8k Gilt) could somewhat weigh into the bidding deadline.
- SPEAKERS: Fed Barkin (x2), Goolsbee, Bowman, ECB Lane.
RATINGS: Moody's Affirmed The EFSF On Tuesday
Feb-05 07:21
Moody’s affirmed the European Financial Stability Facility (EFSF) at Aaa; Outlook stable in an ad-hoc ratings announcement after the close on Tuesday.
BTP TECHS: (H5) Bullish Theme
Feb-05 07:16
- RES 4: 122.85 High Dec 12
- RES 3: 121.88 76.4% retracement of the Dec 11 - Jan 13 bear leg
- RES 2: 120.98 61.8% retracement of the Dec 11 - Jan 13 bear leg
- RES 1: 120.45 HIgh Jan 5
- PRICE: 120.26 @ Close Feb 3
- SUP 1: 119.38 20-day EMA
- SUP 2: 118.65/117.16 Low Jan 24 / 13 and the bear trigger
- SUP 3: 116.59 76.4% retrace of the Jun - Dec ‘24 bull cycle (cont)
- SUP 4: 116.07 Low Jul 8 ‘24 (cont)
A corrective phase in BTP futures remains intact.The latest move higher has resulted in a breach of both the 20- and 50- day EMAs. This signals scope for an extension of the bull cycle and sights are on 120.98, a Fibonacci retracement. On the downside, initial key support to watch lies at 118.65, the Jan 24 low. Clearance of this price point would highlight a reversal and the end of the correction.
