Tomorrow is a big domestic data day for South African markets, with the CPI and retail sales data to be released.
The slew of data could set the tone for Thursday’s SARB interest rate decision and the Q4 risk tone.
Investors come in knowing the July CPI printed 3.5% YoY, a 10-month high. While it remains within the 3-6% band, it stayed above the stated ambition to target around 3% over time rather than just the midpoint of the 3-6% range.
While inflation expectations declined to a record low, a surprise in the data tomorrow could affect the South African markets.
However, if CPI is softer than expected, the conversation could tilt back to gradual easing later in the cycle.
The rand is holding a tight range near 17.35 against the USD and could remain relatively stable in the period leading to the central bank decision but could react to strong changes in inflation figures.
On the equities side, yesterday’s tape closed modestly firmer on the JSE and recorded some volatility today and could find support in a softer outlook for monetary policy. Meanwhile, gold trading near record highs adds a supportive undertone for local miners and South African assets in general.
Leave a Comment