Today, the local data card will be headlined by the Absa manufacturing PMI numbers for March. Recall that the index moved further into the sub-50 territory (44.7 pts) in February for a fifth straight month. Along with this decline, ETM’s proprietary PMI also declined to 42.2 pts in February. An ongoing weak PMI reinforces the challenges the manufacturing industry faces amid the country’s continued deindustrialisation. The impact of the challenges within the industry is also reflected in the ‘expected business conditions’ subindex, which reported a third monthly decrease in February (60.5 points) as optimism about future economic conditions among manufacturers deteriorates. Looking ahead, there is little reason to believe that March will reflect an improvement in the PMI reading, as deindustrialisation within the domestic economy continues with no signs of this trend reversing.

Perhaps more important for markets today will be government discussions around the budget vote. DA Leader John Steenhuisen said he would brief the media at 08:30 on the outcomes of this weekend’s negotiations, although this briefing has since been cancelled as negotiations are going down to the eleventh hour. The outcome will have implications for the budget vote and Wednesday, and the continued existence of the GNU more broadly. Recall that the DA and the ANC expressed optimism about reaching a budget agreement on Sunday after the ANC initially rejected a DA proposal to jointly oversee economic policy within the GNU on Friday. The ANC is likely reluctant to make any concessions around giving the DA more power over economic-decision making, but unless it can find votes to support its budget elsewhere, it may have no choice. In the meantime, headlines will continue to drive intraday volatility, with the risk of the GNU collapsing over the budget impasse still lingering.

ZAR Markets

Heightened intraday volatility remains the order of the day for the USD-ZAR as the market reacts to headlines around ongoing budget discussions in SA. The risk that the GNU collapses over the budget impasse will keep investors tetchy ahead of tomorrow’s vote, while they will also need to navigate global volatility stemming from the Trump administration’s reciprocal tariffs that are also set to be announced tomorrow. Pulling the lens back slightly, the techs remain in the ZAR’s favour after a strong relationship between the USD-ZAR and the DXY index (trade-weighted dollar) broke down early in March. The pair is also currently trading near the diagonal resistance line of its downtrend since January, which held up despite being tested yesterday.

Global FX Markets
The U.S. dollar remained soft in Asia this morning after a challenging first quarter, as investors prepared for President Donald Trump’s anticipated announcement of reciprocal tariffs on Wednesday, with limited details fuelling uncertainty. Focus for the session has been on the Australian dollar which stabilised following an initial uptick, following the Reserve Bank of Australia (RBA) decision to keep interest rates at 4.1%, as expected. The RBA dropped its explicit caution about further rate cuts but remained wary about the economic outlook, with analysts suggesting a future cut isn’t imminent, pending inflation data and the May 3 election. The Aussie had hit a four-week low of $0.6219 on Monday but gained 1% over the quarter. For the most part, currency markets have been rangebound this morning ahead of the deluge of PMI data due today. Looking ahead, Beyond tariffs, upcoming U.S. economic data, including jobs reports, and Federal Reserve Chair Jerome Powell’s speeches this week could clarify the U.S. economy’s trajectory and interest rate path under Trump’s second term.