SOUTH AFRICA: SARB Governor Kganyago Calls For Lower Inflation Target
Feb-14 07:27
- SARB Governor Lesetja Kganyago said that the central bank believes that a lower inflation target would be appropriate after completing research into the issue. He said in a speech that South Africa's inflation target of +3.0%-6.0% Y/Y is higher and wider" than in most countries, adding that the central bank "champions" the idea of lowering the target, "because we believe deeply in excellence in price stability, not just in doing the least we can get away with."
- President Cyril Ramaphosa sought to assuage fears about the Expropriation Act as he responded to the SONA debate in parliament yesterday, pledging not to allow for forced land grabs. The President also said that the Government of National Unity (GNU) is South Africa's best opportunity to overcome its many challenges, despite occasional differences between the 10 parties forming the ruling coalition.
- The National Treasury will sell linkers later today.
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BUNDS: Off the low Post UK CPI, a Busy day ahead
Jan-15 07:23
- It was a very tight range for Bund overnight, but this was quickly broken after the UK CPI came below expectation, helping the contract jump 19 ticks to test a new intraday high.
- Regardless of the early price action, the contract remains under serious pressure, after having lost 690 ticks from the 2nd of December high to Yesterday's low. a one way price action.
- The German 10yr yield has cleared the July high Yesterday, and should again be quoted close to that level, equated to 130.47 Yesterday.
- Investors will now be staring at the 2024 high printed in late May at 2.706%, this equated to 129.89 Yesterday.
- Resistance will be at Yesterday's high of 131.09 initially.
- Today sees, France, Spain Final CPIs, and of course the US CPI.
- SUPPLY: UK £4bn 10yr (equates to 30.5k Gilt) should weigh into the bidding deadline, Germany 2053, 2054 (equates combined to 17.6k Buxl) could weigh.
- SPEAKERS: ECB Lane, Guindos, Villeroy, Vujcic, Fed Kaskari, Williams, Goolsbee, BoE Taylor.
GOLD TECHS: Monitoring Resistance
Jan-15 07:20
- RES 4: $2762.3 - High Nov 1
- RES 3: $2730.4 - 76.4% retracement of the Oct 31 - Nov 14 bear leg
- RES 2: $2726.2 - High Dec 12
- RES 1: $2698.0 - High Jan 10
- PRICE: $2682.2 @ 07:19 GMT Jan 15
- SUP 1: $2644.3 - 50-day EMA
- SUP 2: $2596.2/2583.6 - Low Dec 30 / 19
- SUP 3: $2564.4 - Low Nov 18
- SUP 4: $2536.9 - Low Nov 14 and a key support
Recent gains in Gold appear corrective - for now. However, the yellow metal continues to hold on to the bulk of last week’s gains and scope is seen for a continuation higher near-term. A stronger recovery would open $2726.2, the Dec 12 high and an important resistance. Clearance of this level would be a bullish development. On the downside, a reversal lower would expose $2583.6, the Dec 19 low. Initial support is at $2644.3, the 50-day EMA.
UK DATA: Volatile categories contribute to the negative surprise in UK CPI
Jan-15 07:15
Looking through the details here we have services notably softer than expected at 4.37%Y/Y. Core goods and food/alcohol a little higher than expected (so less of a surprise in core / headline).
- Air fares are soft. Only rising 16.2%M/M in December - the expectations we had seen for that were around 40-45%M/M (remember this is NSA data). They alone contributed to headline CPI falling 0.14ppt and around double that for services CPI.
- Accommodation services also soft - contributing -0.07ppt to headline CPI.
- Cultural services -0.04ppt contribution.
- Other than that clothing and tobacco (both expected to contribute negatively).
- At first glance this doesn't look very broad-based at all and is largely the most volatile components contributing almost entirely to the downside in services / core / headline CPI.
- GBPUSD hit a low of 1.2163 but is around 20 pips higher at the time of writing.
