EUR/ZAR Exchange Rate Bolstered by Upbeat Data
The Euro to South African Rand (EUR/ZAR) exchange rate is pressing higher this morning as a solid Eurozone Consumer Price Index helped the single currency shake off some of yesterday’s GDP disappointment.
At the time of writing the EUR/ZAR exchange rate is up by around 0.6% on the day, bringing the pairing within touching distance of the week’s best levels.
Euro (EUR) Exchange Rates Lifted by Eurozone CPI Figures
The Euro (EUR) is punching higher against the South African Rand (ZAR) this morning and is now well on its way to recouping the majority of Tuesday’s losses following the release of the Eurozone’s latest CPI figures.
According to data published by Eurostat, headline inflation in the bloc ticked up from 2.1% to 2.2% this month, rising in line with market expectations and striking its highest levels in almost six years.
— fastFT (@fastFT) October 31, 2018
On top of this, underlying inflation also picked up this month as it jumped from 0.9% to 1.1%, surpassing forecasts of a more modest rise to 1%.
The rise in core inflation will be particularly welcome from EUR investors as – while headline inflation in the Eurozone has held above the European Central Bank’s (ECB) target range of 2% for some time now – policymakers have repeatedly raised concerns about stubbornly low underlying inflation.
Adding to the Euro’s strength this morning was the accompanying Eurozone unemployment figures, with the bloc’s jobless rate shown to have held at 8.1% in September, its lowest rate since November 2008.
South African Rand (ZAR) Exchange Rates Softens amid Ratings Concerns
Meanwhile the South African Rand (ZAR) finds itself ceding ground this morning after pressing higher on Tuesday.
While hopes of a possible US-China trade deal helped to bolster risk-appetite amongst currency traders in yesterday’s session, it appears this relief for the Rand was only temporary in the face of South Africa’s tarnished economic outlook.
The Rand’s woes appear to be focused mainly on concerns about Moody’s upcoming credit appraisal, with investors steering clear of ZAR for fear that South Africa could lose its last investment grade credit rating.
EUR/ZAR Exchange Rate Forecast: Rand to Stumble as Manufacturing PMI Weakens?
Looking ahead, the Euro South African Rand (EUR/ZAR) exchange rate may extend its gains throughout the second half of the week, following the release of South Africa’s latest manufacturing PMI figures.
Thursday’s data is currently expected to show that South Africa’s factory index remained in negative territory in October, which if correct will see the country’s manufacturing sector contract for a third consecutive month.
Meanwhile the Eurozone will also be publishing its own manufacturing PMI, with Friday’s figures potentially tempering any gains in the Euro at the tail end of the week as they are expected to confirm activity in the bloc’s factory sector slowed to a 26-month low in October.