EUR/ZAR Exchange Rate Weakened by Upbeat Chinese Data
The Euro to South African Rand (EUR/ZAR) exchange rate is on the defensive this morning after some upbeat Chinese economic data saw a sharp upswing in market risk sentiment.
At the time of writing EUR/ZAR exchange rate is down around -0.3% so far this morning, as the pairing continues to drift away from the two-week high struck on Tuesday, trading at 15.78 on the inter-bank market.
South African Rand (ZAR) Boosted by Risk-On Mood
The South African Rand (ZAR) is on the front foot against the Euro (EUR) this morning as the risk-sensitive currency was lifted by an upswing in market risk appetite.
This comes in the wake of some impressive Chinese economic data published overnight.
The main focus was on China’s latest GDP figures, which revealed that growth in the country held at 6.4% in the first quarter.
While this was a decade-low, it beat forecasts that growth may have slowed even further, leading to suggestions that China’s economy may have already bottomed out.
This boosts hopes that global growth may begin to pick up again in the coming months, which helped to lift risk-appetite this morning.
At the same time, also potentially supporting the Rand this morning was the publication of South Africa’s latest Consumer Price Index, with inflation ticking up from 4.1% to 4.5% in February.
Analysts suggest this uptick in inflation should be enough to stave off any calls from within the South African Reserve Bank (SARB) for potential monetary easing and could even see the bank implement a rate hike by year’s end.
Euro (EUR) Exchange Rates Muted as Eurozone Inflation Slides
Meanwhile the Euro (EUR) is struggling to hold its ground against the Rand this morning after data confirmed that Eurozone inflation fell last month.
According to the European statistics agency, Eurostat, inflation was shown to have slowed to 1.4% in March while core inflation fell to an eleven-month low of 0.8%, in line with a preliminary reading published earlier this month.
The slowing of inflation will frustrate EUR investors as it backs up the European Central Bank’s (ECB) decision to leave interest rates on hold until at least 2020.
EUR/ZAR Exchange Rate Forecast: Weak Eurozone PMIs to Dent Euro?
Looking ahead, movement in the Euro South African Rand (EUR/ZAR) exchange rate looks set to be dominated by the Eurozone’s latest PMI figures in the second half of this week.
So far in 2019 growth in the Eurozone has been pretty lacklustre, particularly in the manufacturing sector which contracted in both February and March.
The question for EUR investors however will be whether this weakness will extend beyond the first quarter, with another soft reading in April likely to dent the Euro as it suggests that Eurozone may face a protracted slowdown this year.
In the meantime, South African will publish its latest retail sales figures later this afternoon, with the Rand likely to come under some pressure if sales growth slowed again in February, as forecast.