Eskom has eased power outages following the recovery of multiple generation units that failed over the weekend, triggering the worst blackouts in a year. After resorting to severe Stage 6 load shedding on Sunday – cutting 6,000 megawatts from the grid – Eskom scaled back to Stage 4 this morning, reducing the shortfall to 4,000 megawatts. The utility remains cautious, maintaining outages until further notice to stabilize the grid. Eskom CEO Dan Marokane expressed optimism, stating that the situation should improve by week’s end. The relief this morning comes as five units at Majuba, two at Camden, and one at Medupi power stations return to service, though two units remain offline. Eskom attributed the outages to isolated technical failures rather than systemic issues. Efforts to replenish emergency reserves are also progressing well, reinforcing supply stability. The restoration underscores Eskom’s ongoing struggle to balance demand and generation capacity, as it navigates a fragile power system prone to unexpected disruptions.
Looking at the local data card, the week ahead promises to be exceptionally busy, with the usual end-of-month releases accompanied by the delayed CPI report. Investors are eager for clarity on South Africa’s economic trajectory, and this data will provide crucial insights into the credit cycle, inflationary pressures, government finances, trade balances, and the SARB leading indicator. However, concerns loom over the reliability of inflation data, as budget constraints at Stats SA raise fears of compromised data collection, smaller sample sizes, and under-resourced statistical teams. Without high-quality data, policymakers will struggle to craft a coherent growth strategy, heightening economic uncertainty. The implications for monetary policy, in particular, are profound. Inflation data is a cornerstone of SARB’s decision-making, guiding interest rate adjustments and influencing perceptions of price stability. Foreign investors need confidence in the economy they are investing in and can only do so if they trust the data to reflect reality.
ZAR Markets
The USD-ZAR remains fairly stable near the floor of its recent trading range at 18.3000. The rand is benefitting from a USD that is trading on the back foot at the start of the week, owing to a stronger EUR after the conservatives won the German elections ahead of the Eurosceptic, right-wing AfD party. Whether there is enough momentum for the USD-ZAR to break lower is uncertain, although a pivot back towards the 50-day moving average at 18.6000 appears more likely in the near term. The market has struggled to break out of its current trading range for all of this year so far, meaning a strong catalyst – most likely on the USD leg of the trade – is likely needed for this to occur.
Global FX Markets
Haven currencies, including the U.S. dollar, rose on Friday as investor sentiment weakened due to concerns over U.S. growth and impending tariffs. The S&P Global index showed U.S. business activity nearly stalled in February, with the services sector contracting. Consumer sentiment hit a 15-month low, and the housing market showed signs of weakness. China’s Vice Premier He Lifeng expressed concerns over U.S. tariffs in a call with U.S. Treasury Secretary Scott Bessent, while reports suggested former President Trump is considering tariffs to counter digital taxes. Bank of Canada Governor Tiff Macklem warned that prolonged U.S. tariffs could severely impact Canadian growth in 2025 and 2026. The euro strengthened on Monday following Germany’s election results, where the conservative party, led by Friedrich Merz, won as expected. However, coalition talks may be complex as the far-right AfD secured a historic second place.. The euro rose 0.46% to $1.0508, with investors now watching how quickly Merz can form a government to address economic challenges. Sterling hit a 2025 high of GBP/USD1.2690 before pulling back slightly this morning ahead of the EU open. Sterling took much of its direction from a rising euro this morning. Pulling back the lens, a post-Brexit, GBP/USD is less tied to Europe, and with the BoE focused on controlling inflation, the pound remains strong against both the euro and USD. The yen has cemented its position below the USD/JPY150.00 mark this morning hitting an intra-day low of USD/JPY148.84 before Japanese importers stepped in to take advantage of the better levels taking the pair slightly higher. We remain sellers on the upticks with the view that lower levels will materialise in due course.