EUR/ZAR Exchange Rate Lifted by US-China Trade Optimism
The Euro to South African Rand (EUR/ZAR) exchange rate fell back on Friday morning, relinquishing some of its recent gains as risk-appetite was bolstered by fresh hopes of a US-China trade deal.
At the time of writing the EUR/ZAR exchange rate is down around 0.5% so far this morning as the pairing slips from the 10-week high struck on Thursday.
South African Rand (ZAR) Bolstered by Trade Deal Hopes
The South African Rand (ZAR) was back on the offensive against the Euro (EUR) this morning, recouping some of Thursday’s losses as the trade-sensitive currency was lifted by renewed US-China trade deal hopes.
This comes after Chinese Vice Premier Liu He reported ‘concrete progress’ following a telephone call with US Treasury Secretary Steven Mnuchin and U.S. Trade Representative Robert Lighthizer overnight on Thursday.
A statement released after the call said:
‘The two sides have further made concrete progress on the text of the trade agreement between the two sides.’
While the statement was light on details it helped to revive hopes that a trade deal may be seen sometime in the foreseeable future, after Mnuchin ruled out a deal being ready in time for President Trump and President Xi to sign off at a summit at the end of March.
Mnuchin’s comments contributed to the recent weakness in the Rand as he made the remarks in a hearing in the House of Representatives on Thursday.
Euro (EUR) Exchange Rates Remain Muted Following Inflation Figures
Meanwhile the Euro (EUR) found little upside on Friday as the Eurozone’s latest CPI figures confirmed that Eurozone inflation stayed at 1.5% in February.
At the same time Eurostat also confirmed that core inflation fell to 1% last month, in line with a preliminary reading.
This leaves Inflation well below the European Central Bank’s (ECB) target rate of 2% despite the ECB’s extraordinary stimulus measures taking by the ECB in recent years.
EUR/ZAR Exchange Rate Forecast: Weak PMI Figures to Drag on the Euro?
Looking ahead, the Euro South African Rand (EUR/ZAR) exchange rate may face some pressure next week with the release of the Eurozone’s latest PMI figures.
Economists forecast March’s PMI figures will point to another month of subdued growth in the bloc, with the manufacturing sector expected to have contracted for the second consecutive month, fueling concerns of a prolonged slowdown in the Eurozone and likely limiting the appeal of the Euro.
Meanwhile the Rand may also struggle next week, if the sharp contraction in South African retail sales growth in December carries through to the start of 2019.