07 November 2013
South Africa: Manufacturing Production
Our economist is forecasting September manufacturing production to decline 3% mom, as
labor strikes in the motor vehicle and components sectors continued in the month. This is
below consensus forecasts for a 1.2% decline.
We remain bearish ZAR and see scope for rand underperformance relative to its EM peers
as domestic data moderate and the currency remains susceptible to negative labor market
Market consensus for October IPCA inflation is for 5.87% yoy, in line with the 5.86%
reading in September. We think the data will have minimal impact on FX, as markets are
more likely to focus on the broader impact of the stronger USD. A significant deterioration
in BRL would likely make the BCB more confident with regards to maintaining its USD
swap program, an option which was a more frequent object of debate when BRL was
trading closer to 2.10.
The Global Macro Pulse