EUR/ZAR Exchange Rate Accelerates as Eurozone PMI Clears Gloom
The Euro to South African Rand (EUR/ZAR) exchange rate is rallying this morning as markets welcome the release of the Eurozone’s latest PMI figures.
At the time of writing EUR/ZAR exchange rate is up by around 0.3% this morning, propelling the pairing to ZAR15.9475.
Euro (EUR) Exchange Rates Buoyed as Eurozone PMI Beats Expectations
The Euro (EUR) is trending higher against the South African Rand (ZAR) this morning after the Eurozone’s PMI figures came in higher than expected last month.
According to data published by IHS Markit, the composite PMI reading climbed from 51.8 to 52.2 in June, beating a preliminary estimate that it would only reach 52.1.
This was mostly driven by growth in the Eurozone’s service sector striking an eight-month high in June, offsetting the continued weakness in the bloc’s manufacturing sector.
However, while EUR investors will be relieved to hear that the Eurozone’ private sector showed improvement last month, its unlikely to deter the European Central Bank (ECB) from moving ahead with its stimulus plans, limiting the potential upside in the Euro.
Chris Williamson, Chief Business Economist at IHS Markit, said:
‘Given the relatively weak current and future growth being signalled by the PMI and the accompanying slide in inflationary pressures, we expect to see renewed stimulus from the ECB in coming months.’
South African Rand (ZAR) Subdued as Markets Await Fresh Catalyst
At the same time, the South African Rand (ZAR) is struggling to find momentum this morning as ZAR investors await fresh catalyst for movement.
The Rand got off to a strong start this week as the emerging currency was buoyed by rising risk appetite, following the announcement that the US and China had reached a truce on trade at a meeting between US President Donald Trump and his Chinese counterpart Xi Jinping on the side lines of the G20 meeting.
However this trade optimism has been quick to fade after the US threated to open a new trade dispute with the EU, warning it could target $4bn worth of EU products with tariffs in a row over alleged EU subsidies to Airbus.
EUR/ZAR Exchange Rate Forecast: Rebound in Eurozone Retail Sales to Lift the Euro?
Looking ahead, movement in the Euro South African Rand (EUR/ZAR) exchange rate on Thursday is likely to be driven by the release of the Eurozone’s latest retail sales figures.
This may prompt the single currency to rally tomorrow as economists forecast that sales growth will have expanded by 0.3% in May after a 0.4% contraction in April.
Meanwhile, the Rand faces potential headwinds in the latter half of the week, with market risk appetite potentially being knocked by a stronger US Dollar (USD), which looks poised to accelerate if US payrolls rebounded as expected last month.