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Although there is no expected change to the cash rate of 6.5% that was kept on hold at the last meeting, we hope to get some hints as to where the monetary policy of the country stands and where it is going from here.
Mabuza resigning affects the Rand
The local currency took a big hit late last week after Eskom chairman Jabu Mabuza resigned on Friday. Mabuza accepted responsibility for the power utility’s failure to deliver on a pledge made to keep the lights on from 17 December through to 13 January, following a conveyor belt breaking at the Medupi power station. Former Ampak boss Andre de Ruyter has now replaced Mabuza as CEO of Eskom.
Market event calendar
On Wednesday, we will see the release of November’s retail
sales. Expectations are that that the month-on-month figure is set to rise by
3.7%, a drastic improvement from October’s 0.2% decline.
On Tuesday we will have a look into the consumer confidence of the country from the final quarter of last year. We expect a dip of three index points from -7 to -10 when it is released on Tuesday morning.
The ZAR softened somewhat after weak manufacturing data and
possible resumption of load-shedding throughout this week. The local currency
struggled following Moody’s warning that a downgrade could come soon, should
the government not come up with a credible budget in February.
Globally, the Rand is looking to gain some strength from the
imminent signing of the US-China phase one trade deal on Wednesday. This will
be the first positive step towards ending an 18-month trade war between the two
largest economies in the world.