The momentum that Em markets enjoyed on Friday seemed to have outweighed the China zero-Covid talk of this morning. We did see the Rand move all the way back above the R18.00 mark in early morning trade, but with the US dollar moving towards parity against the Eur, we did see the Rand respond in kind. The Rand is within sight of the R17.70 level and is currently trading at R17.7250. The move in the Rand is around 70 cents in the matter of two trading days, which makes us believe that the Rand could run out of puff in the short term, and we could see some consolidation as we head into the data that is out this week.
While we had non-farm numbers out last week, the fun doesn't stop with the US CPI out this week. The market expects the inflation number to be around the 8% mark, with any miss likely to cause some volatility in the market. We expect a higher-than-consensus figure to put EM's on the back foot and vice versa. Should the number be lower than expected, it will put the spotlight back on the Fed and whether they will reign in their hawkish talk if inflation is lower than expected.
#Markets #ZeroCovid #Parity
