LOCKDOWN LEVEL 2 Ver1 [ DAY 5]  

TOTAL DAYS 435 – 7 HOURS 30 MINUTES

Vaccine rollout day 119 / J & J VACCINE DAY 115 [Phase 2]

Milestone – 1 million vaccines administered

By the close of trade on Thursday 3rd June 2021, the South African rand weakened against the US dollar.

  • In the US, the number of people filing new claims for unemployment benefits dropped below 400,000 for the week ended 28 May, pointing to strengthening domestic labour market conditions.
  • The ISM services index increased to a record high in May, amid robust demand as the economy moves towards fully reopening. Also, ADP employment rose in May, boosted by robust demand, but shortages of workers and raw materials continued to loom over the labour market recovery.
  • Nonfarm productivity rebounded solidly in 1Q21, indicating that the labour costs grew instead of contracting as previously reported.  The U.S. dollar traded sharply higher against all of the major currencies on Thursday with USD/JPY closing above 110 for the first time since April which is a sign that investors are positioning for a strong report. Last month’s jobs number was abysmal with U.S. companies adding only 266K new workers. Economists are looking for job growth to more than double in May but the problem is that other U.S. indicators favor a softer report. Although weekly jobless claims fell below 400K for the first time since the pandemic began and ADP reported a very strong increase in private payrolls.
  • The Biden administration is seeking a more comprehensive and in-depth strategy to compete with China, Chinese experts said, after US President Joe Biden blocks 59 Chinese companies in amended Trump order on Thursday, but warned that such move will “lift a rock only to drop it on its own feet in the end.” Biden signed an order Thursday amending a ban on US investment in Chinese companies begun under his predecessor, naming 59 firms with ties to China’s military or in the surveillance industry, including Huawei Technologies and the country’s three biggest telecommunications companies.
  • Today, the Russian Finance Minister Anton Siluanov announced that Russia will fully de-dollarise the National Wealth Fund (sovereign fund), converting its remaining US$40 bn into Chinese yuan, gold, and euro within a month’s time. The share of USD will drop from 35% to zero, while euro will go up to 40%, Chinese yuan to 30% and gold to 20%. While the ruble initially reacted positively to the news, we believe it to be neutral.  The de-dollarisation is unlikely to involve any open market transactions.
  • The yield on benchmark government bonds fell yesterday. The yield on 2026 bond fell to 7.31%. Further, the yield on 2023 bond declined to 4.94%, while that for the longer-dated 2030 issue fell to 8.85%.

In early trade on Friday 4th June 2021, the US dollar is trading lower against the South African rand at R13.6380, while the euro is trading lower at R16.5182.  The British pound has declined against the South African rand to trade at R19.2252.

By the close of trade on Thursday, the euro declined against most of the major currencies.

  • German services PMI returned to growth in May, on account of falling coronavirus infections and a loosening of COVID-19 restrictions. Further, eurozone business activity surged in May as the easing of coronavirus related restrictions boosted the bloc’s dominant services industry.
  • Home buying across Australia is still surging with latest figures revealing a big bump in new mortgages being committed. Latest lending indicators collected by the Australian Bureau of Statistics has revealed new loans for housing rose 3.7 per cent in April, compared to the prior month. Overall, Australians have signed up to $31bn worth of housing debt in April alone, which is a record high according to the nation’s peak statistics body.
  • Japan’s household spending in April rose a record 13.0 percent from a year earlier, as consumption rebounded from a sharp decline triggered by the initial shock of the coronavirus pandemic last year, government data showed Friday. The year-on-year increase was the largest since comparable data became available in January 2001, with households with two or more people spending an average 301,043 yen ($2,700) in real terms, the Ministry of Internal Affairs and Communications said. The 13 percent rise was the second straight monthly growth following a 6.2 percent increase in the previous month.

In early trade on Friday, the euro has slipped against the US dollar to trade at $1.2126, while it has marginally weakened against the British pound to trade at GBP0.8622.

Have a great weekend everyone, stay warm and stay safe.