There was not much data or event to write home about last week and we have another relatively quiet week ahead on the data front. The headlining data print form last week further supported a strong and resilient US economy with the US non-manufacturing PMI which came in higher than expected at 64.0 in December, up from 57.4. Locally, more weak economic data prints were released after the year-on-year SA manufacturing production print came in at a disappointing 0.7%, down from 2.5%.
In the week ahead, the headlining events are the US CPI figures for January and expectations are for the CPI to continue to slow to 3.0%, down from 3.4%. Additionally, the Eurozone and UK, whose economies have been lagging behind the US, will release their 4Q2023 GDP results. Locally the only data prints to look out for are the SA mining production and retail sales figures for December.
Jumping straight into the charts, we start with the US 10-year yield following last week’s auction where the yield closed higher at 4.093%. The US 10-year managed to climb above the 200-day MA resistance level of 4.133% last week and a move higher towards the 38.2% Fibo level at 4.347% is the expected move on our side.
Similarly, the dollar is also trading in a strong upward channel and our target level from last week, the 61.8% Fibo rate of 104.79 is firmly in the dollar’s sights. The support level at 104.00 will however need to hold its ground for this move to materialize and we expect strong resistance for the greenback on the red downward trend line.
Over to the rand, the local unit managed a strong performance last week Tuesday in the lead up to the SONA and the latest government budget figures. Unfortunately the rand could not sustain any of the momentum. The pair is currently dancing with the critical level on the 61.8% Fibo rate of 18.97 and a failed break above 19.07 will allow the rand to test the critical support. It’s a tough call to make I’m leaning towards a break below 18.97 this week given the possible double top forming on the pair around 19.07.
Looking over to the equity space, the S&P 500 has continued to post fresh all-time highs last week but our JSE has struggled to attract investor attention. The index failed to hold levels above the 50-day MA level of R68,078 which saw the index slide back into the red-support level. Some much needed rand strength will however allow the JSE to maintain its upward higher trend which will be positive as we head into the second half of 1Q2024.
Closing out this week’s report we have bullish bitcoin. BTC surged past it’s 50-day MA of $43,356 last week. The 61.8% Fibo level at $48,910 is the critical level to watch as a break above this level will allow BTC to climb back to its all-time highs above $60,000. In rand terms one BTC will now set you back more than R900,000 and the R1000,000 is now firmly in the crosshairs.
