SOUTH AFRICA: Ramaphosa Survives Trump's Ambush, SARB Deems CPI Range Too Wide
May-22 06:42
- Media coverage of talks between Presidents Cyril Ramaphosa and Donald Trump was dominated by their anticipated clash over the latter's allegations of 'white genocide' happening in South Africa, which he decided to back by playing video footage of Economic Freedom Fighters (EFF) leader Julius Malema chanting the controversial song 'Shoot the Boer'. Ramaphosa relied on testimonies of white members of his delegation, including Agriculture Minister John Steenhuisen and business tycoon Johann Rupert, to push back against these accusations.
- In another sign of simmering tensions, South Africa's Special Envoy for the US Mcebisi Jonas was blocked from the meeting due to his past disparaging comments about Trump.
- During a media briefing following the meeting, Ramaphosa told reporters that 'in the end, we had a really good bilateral' and the US side committed to further engagements 'to deal with the package of issues that we have tabled.'
- News24 reported that the US side specifically demanded lower tariffs than those in the initially proposed trade framework and the South African team submitted a revised proposal Tuesday night.
- Ramaphosa also said that Trump promised to consider attending the November G20 summit in Johannesburg, where the US is due to take over the group's rotating presidency.
- Finance Minister Enoch Godongwana delivered the third version of South Africa's 2025 National Budget, or Budget 3.0, which is expected to sail smoothly through parliament, ending months of a political and fiscal crisis. Godongwana dropped the controversial VAT hike but hiked the fuel levy instead and pencilled in a further ZAR20bn of tax increases into next year's budget. He also unveiled cuts to additional spending allocations for frontline services and social grants. The new budget assumes slower growth and a higher debt peak, but overall the updated projections were better than expected.
- The uMkhonto weSizwe (MK) tabled a motion of no confidence against President Ramaphosa and Finance Minister Godongwana over 'gross incompetence' and a 'chaotic budgetary process' but it is likely to fail in parliament.
- SARB Deputy Governor Fundi Tshazibana told reporters that there was 'broad consensus among us that our [inflation target] range is too wide and out of line with that of our trading partners.' While officials were not ready to make any announcements quite yet. 'we are at the point where the technical teams will make recommendations to the Minister of Finance and the Governor of the Reserve Bank on the way forward.'
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USD: Paring some losses into the EU Session
Apr-22 06:40
- The Dollar is in the red across all G10s, albeit off its worst levels going into the European session.
- As previously noted the Yen rallied to its best level since September, as the USDJPY fell below the 140.00 figure, printing a 139.89 low for the early session.
- The cross seems to be finding some support as Europe comes in, some suggestion of potential Option barrier might be helping, but looking at Option expiries, the only notable size is on Thursday with 1.61bn worth of expiry at 140.00.
- The Dollar is now seeing a small bid against the EUR, CHF, GBP, CAD, AUD, NZD, SEK and NOK, albeit all within the Overnight ranges.
EURJPY TECHS: Trend Signals Remain Bullish
Apr-22 06:33
- RES 4: 165.43 High Nov 8
- RES 3: 164.90 High Dec 30 ‘24 and a key medium-term resistance
- RES 2: 164.55 High Jan 7
- RES 1: 163.55/164.19 High Apr 14 / High Mar 18 and the bull trigger
- PRICE: 161.55 @ 07:32 GMT Apr 22
- SUP 1: 161.18/158.30 50-day EMA / Low Apr 7 and key support
- SUP 2: 157.02 76.4% retracement of the Feb 28 - Mar 18 bull cycle
- SUP 3: 155.60 Low Low Mar 4
- SUP 4: 154.80 Low Low Feb 28
The recent pullback in EURJPY appears corrective - for now - and trend conditions remain bullish. Key short-term support has been defined at 158.30, the low on Apr 7. A break of this level is required to signal scope for a deeper retracement. This would open 157.02, a Fibonacci retracement. For bulls, a resumption of gains would expose 164.19, the Mar 18 high and the bull trigger. Clearance of this hurdle would resume the uptrend.
WTI TECHS: (M5) Monitoring Resistance
Apr-22 06:30
- RES 4: $75.51 - High Jan 15 and a key resistance
- RES 3: $72.56 - High Feb 20
- RES 2: $66.22/71.76 - 50-day EMA / High Apr 2 and key resistance
- RES 1: $64.49 Low Mar 5 low and a recent breakout level.
- PRICE: $62.88 @ 07:20 BST Apr 22
- SUP 1: $58.29/54.67 - Low Apr 10 / 9 and the bear trigger
- SUP 2: $53.72 - 2.236 proj of the Feb 20 - Mar 5 - Apr 2 price swing
- SUP 3: $52.54 - 2.382 proj of the Jan 15 - Feb 4 - 11 price swing
- SUP 4: $50.00 - Psychological round number
A bearish theme in WTI futures remains intact and the recovery since Apr 9 is - for now - considered corrective. The move higher is allowing an oversold trend condition to unwind. Recent weakness has resulted in the breach of a number of important support levels, reinforcing a bearish threat. A resumption of the bear cycle would open $53.72, a Fibonacci projection. Initial firm resistance is seen at $64.49, the Mar 5 low and a recent breakout level.
