Closing the loop

Market highlights:

• The rand is stronger at R15.85/$ (R16.04/$*) today; it ranged between R15.83/$ and R16.06/$.
• The currency is below its 50-day, 100-day and 200-day moving averages (R15.69/$, R15.35/$ and R15.37$ respectively).
• EM currencies are mixed today with a post-election slump in the COP (-3.1%); the ARS (-0.9%) and PHP (-0.6%) are the other biggest losers while the ZAR (+1.0%), BRL (+0.9%) and RUB (+0.7%) gained the most.

• The current account deficit of the euro area widened to EUR5.8b in April, from a deficit of EUR1.6b during March.
• Deficits were recorded for income (mostly dividend and interest payments) as well as goods in April, which was partly offset by a surplus for services.  
• In the 12 months to April, the current account recorded a surplus of 1.5% of euro area GDP.

• US existing home sales slowed slightly less than expected, declining 3.4% m/m during May after a drop of 2.6% (revised from -2.4%) in April.
• May is the fourth straight month of decline as mortgage rates head higher.

• Tomorrow sees the release of UK inflation data for May; CPI inflation is expected to print 9.1% y/y, after reaching a 40-year high of 9% in April.
• Earlier today, BOE Chief Economist Huw Pill said that the BOE stands ready to act “more aggressively” to lean against “self-sustaining momentum” in inflation, even if growth must be sacrificed.

• Locally, the SARB’s composite leading business cycle indicator declined to 126.7 in April from March’s reading of 127.1 (revised down from 128).
• The indicator is down 4.7% y/y and 0.3% m/m in April – the largest contraction on an annual basis since May 2020; the level of the leading indicator is now in line with January this year.
• Five out of the available 10 components detracted from the composite indicator.
• A deceleration in the growth rate of new passenger cars (six-month smoothed) and a decline in the US dollar-denominated SA export commodity index made the biggest negative contributions. Faster job advertisement growth (six-month smoothed) and a higher interest rate spread shored it up the most.

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