The markets have a heavy data calendar to digest this week, with a host of PMI’s scheduled for release, in the lead up to Friday’s headlining US non-farm payrolls (NFP’s) release. The US non-farm payrolls measures the change in the number of people employed during the previous month, excluding the farming industry, and is a key measure for the  Federal Reserve to gauge the status of the US labour market. Non-farm payrolls for September are expected to decline to 163 thousand, down from 170 thousand in August. A strong NFP’s print on Friday will support the Fed’s current restrictive monetary policy as it will signal that the US labour market is stable enough to handle the current high interest rate environment.

We’re starting this week’s chart pack with the US 10-year treasury yield. US 10-year yields gapped up at market open this week and there seems to be no respite on the current upward trend in US yields. The rise in US long-term bond yields is depleting investor risk sentiment which is taking its toll on risk assets such as equities and the rand.

Turning our attention to risk assets, the S&P 500 has been on the ropes given the strong dollar and the rise in US bond yields which has seen the index decline roughly 7% since July. The index is currently testing the supporting trend line but a drop towards the 200-day MA at $4,200 seems inevitable at this stage.

The local JSE top 40 is currently in the eye of the risk-off storm and the weak rand is doing it no favours. The JSE top 40 failed to hold onto rate above the R66,500 support and a deeper towards R63,200 is looking increasingly likely unless the rand hold the USD/ZAR pair below R19.30/$.

Speaking of the USD/ZAR, the rand slipped against the dollar last week after the 50-day MA rate of 18.76 held its ground. Our local unit started this week on the back foot which has seen the pair break back above 19.00. A break above 19.30 will allow the dollar to inflict further pain on the rand which will see the pair test the resistance rate of 19.50.

Closing off the chart pack for the week is brent crude oil. The support level at $91.50 per barrel held support last week which is bullish for the black gold. A break above $95.25 pb will allow crude to climb higher towards $98.00 pb.


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