Neutral Reaction to Eurozone Inflation Leaves EUR/ZAR Exchange Rate near One-Week Low
The Euro (EUR) has traded poorly against the South African Rand (ZAR) today, hitting a level of ZA15.45 on the interbank exchange rate.
This poor performance is down the morning’s Eurozone inflation rate stats failing to print above forecast.
The finalised base figures for June have been confirmed at 2% on the year and 0.1% on the month, but the core annual reading has missed forecasts by slowing from 1.1% to 0.9% instead of 1%.
These results aren’t expected to bring a European Central Bank (ECB) interest rate hike any sooner than 2019, which explains today’s insipid Euro movement.
Eurozone Construction Sector Growth Fails to Support EUR/ZAR Exchange Rate
Other Eurozone data out today has similarly failed to boost the EUR/ZAR exchange rate; this has been a construction output reading for May.
The annual printing has risen from 1.2% to 1.8%, missing more optimistic forecasts for growth of 3.8%.
South African Rand to Euro Exchange Rate Rises on IMF Forecast
Today’s minor Rand to Euro (ZAR/EUR) exchange rate gains have come from an International Monetary Fund (IMF) forecast, with South African domestic data being largely unsupportive.
In the former case, the IMF has predicted that South Africa will enjoy an economic recovery in 2018 and into 2019.
This however was limited by inflation data for June, which showed a faster pace of price growth, but not as high as forecast levels.
Euro to South African Rand Exchange Rate Forecast: Will ZA Retail Data Worsen EUR/ZAR Losses?
The Euro’s (EUR) present losses against the South African Rand (ZAR) could extend in the near-term, when South African retail sales data is released.
Covering May, these ecostats are predicted to show positive sales growth on the month and the year, which could boost Rand trader confidence and cause a ZAR/EUR advance.
Thursday’s main economic news will also come from South Africa in the form of the South African Reserve Bank (SARB) interest rate decision.
The SARB is predicted to leave interest rates unchanged at 6.5%, but a surprise rate hike isn’t completely out of the question.
If the central bank does commit to higher interest rates then the Rand could rally against the Euro; today’s uninspiring inflation data makes this a slim possibility, however.
Closing off weekly news will be Friday’s Spanish trade balance reading for May. This is predicted to show a reduction of the existing trade deficit with a shift from -€3.1bn to -€1.7bn.
Such a result could spark optimism among Euro traders in the latter half of the week, potentially bringing a EUR/ZAR exchange rate rise before the weekend.