SOUTH AFRICA: Godongwana To Present 2025 Budget Despite Lack Of GNU Consensus
- South Africa's governing coalition may be facing the toughest test yet, with Finance Minister Enoch Godongwana due to deliver the postponed 2025 National Budget in parliament at 12:00GMT/14:00SAST. The Budget Speech had to be delayed by a few weeks as members of the Government of National Unity (GNU) failed to resolve a deadlock in their talks on the 2pp VAT hike proposed by Godongwana and opposed by the Democratic Alliance (DA) and smaller parties. As things stand, it appears that the Finance Minister will press ahead with the Budget Speech involving some form of VAT hike today, despite indications that other coalition partners will refuse to support it.
- The Finance Minister offered to reduce the proposed VAT increase to 0.5pp and seek savings elsewhere, but this was not enough to persuade coalition partners. Sources told Daily Maverick that they were initially prepared to discuss a downsized tax hike, but "the Treasury’s last-minute revelation of the 2pp figure led to accusations of backtracking and betrayal." The idea was revived later but the ANC and DA failed to iron out their differences in time. This suggests that the budget saga may have lasting consequences for the cohesiveness of the GNU, raising barriers to co-ordination between its constituent parties, regardless of the budget outcome.
- News24 reported earlier this morning that the DA was set to oppose the Budget, which would force the Treasury to offer fresh concessions or enter negotiations with parliamentary opposition. However, both the DA and the opposition Economic Freedom Fighters (EFF) and uMkhonto weSizwe (MK) Party have publicly declared that they would not back any form of VAT hike, which increases political costs of changing tack.
- Minister in the Presidency Khumbudzo Ntshavheni told BusinessDay yesterday that the Finance Minister "will finalise and present the budget" today and any disagreements will be dealt with later. The spending plan will be "tabled, discussed and, if there is a need, sent back" for amendments.
- President Cyril Ramaphosa confirmed that he would be sending a team of envoys to the US to "correct the mischaracterisation" of the recently adopted Expropriation Act and mend ties with the Trump administration. Presidential spokesperson Vincent Magwenya told the Mail & Guardian that the government wanted to open trade talks because access to US markets under the African Growth and Opportunity Act (AGOA) was hanging in the balance.
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GOLD TECHS: Fresh Cycle High
- RES 4: $3000.0 - Psychological round number
- RES 3: $2962.2 - 2.00 proj of the Nov 14 - Dec 12 - 19 price swing
- RES 2: $2917.5 - 1.764 proj of the Nov 14 - Dec 12 - 19 price swing
- RES 1: $2900.0 - Round number resistance
- PRICE: $2894.7 @ 07:31 GMT Feb 10
- SUP 1: $2834.3 - Low Feb 6
- SUP 2: $2776.3 - 20-day EMA
- SUP 3: $2754.3 - Low Jan 30
- SUP 4: $2716.9 - 50-day EMA
A bull cycle in Gold remains in play and the yellow has again traded to a fresh cycle high, today. The continued appreciation once again confirms a resumption of the uptrend and maintains the bullish price sequence of higher highs and higher lows. Moving average studies are in a bull mode position too, highlighting a dominant uptrend. Sights are on the $2900.0 handle next. The first key support to watch is $2776.3, the 20-day EMA.
EURJPY TECHS: Pierces Key Support
- RES 4: 162.70 High Jan 28
- RES 3: 161.40 50-day EMA
- RES 2: 160.50 20-day EMA
- RES 1: 157.97/158.86 Low Feb 3 / High Feb 6
- PRICE: 156.79 @ 07:20 GMT Feb 10
- SUP 1: 155.61 Intraday low
- SUP 2: 155.19/15 3.0% 10-dma envelope / Low Sep 16 ‘24
- SUP 3: 154.42 Low Aug 5 ‘24 and key medium-term support
- SUP 4: 153.87 Low Dec 14 ‘23
A bear cycle in EURJPY remains present and last week’s move down reinforces current conditions. The cross cleared 158.24, 76.4% of the Dec 3 - 30 bull cycle, and pierced 156.18, the Dec 3 low and key support. A continuation lower would open 155.15, the Sep 16 ‘24 low. Initial firm resistance to watch, and a pivot level, is 161.40, the 50-day EMA. The short-term trend is oversold, gains would allow this condition to unwind.
EGBS: J.P.Morgan Recommend Long 30-Year OLOs Vs. OATs
J.P.Morgan recommend long 30-Year OLOs vs. OATs.
- They look for a 30-Year OLO syndication this week and expect the recent run of long end post-syndication performance to continue.
