Euro to South African Rand Exchange Rate on Track to See Significant August Gains
Due partially to hopes for positive progress in US-China trade tensions, the Euro to South African Rand (EUR/ZAR) exchange rate is on track to fall this week. However, the pair has seen significant gains in August overall due to broad South African Rand (ZAR) losses.
Since opening this week at around the interbank level of 17.05, EUR/ZAR has fluctuated relatively closely to the week’s opening levels due to volatility in both currencies.
However, on Friday EUR/ZAR plunged as investors bought the South African Rand following its poor performance for most of the month.
At the time of writing, the EUR/ZAR interbank level was trending closely to a weekly low of 16.80.
Euro (EUR) Exchange Rates Flounder as Eurozone Data Continues to Paint a Mixed Picture
Any remaining hopes for the Eurozone economy to see a rebound in Q3 have been dampened in recent weeks, as German and Eurozone data continues mixed or disappointing trends.
This week’s Eurozone data has been little different, with data either coming in close to low expectations, or falling short. As a result, the Euro has been limp and has been reacting more to movement in rivals.
Today saw the publication of Germany’s July retail sales, which were highly mixed. Monthly sales contracted at a worse than expected -2.2%, while yearly sales jumped from -1.4% to 4.4%.
August’s Eurozone inflation rate projections were a little disappointing however. The core inflation rate is now projected to have remained at 0.9%, rather than rising to 1.0% as previously forecast. The Eurozone’s July unemployment rate remained at 7.5% as expected.
South African Rand (ZAR) Exchange Rates Surge in Month-End Fixings
This week’s biggest Euro to South African Rand (EUR/ZAR) exchange rate movement was this morning’s tumble, as investors piled into the South African Rand (ZAR) at the end of a bearish month for the currency.
The South African Rand saw significant losses near the beginning of the month on US-China trade war fears and South African economic jitters, so the currency is simply recouping some of those losses today.
Its slight rebound is being supported by China’s latest comments in regards to the ongoing US-China trade war. China offered trade-correlated assets some support by indicating it would rather seek de-escalation or resolution than retaliate to the latest US trade tariffs.
As South Africa’s economy relies heavily on trade, this news offered the Rand some support.
Still, the latest trade optimism was limited amid doubts that these comments from China would lead to any notable improvement in trade relations.
Euro to South African Rand (EUR/ZAR) Exchange Rate Could See Further Gains
Unless there are stronger signs of improvement in US-China trade tensions or South Africa’s economic outlook, the Euro to South African Rand (EUR/ZAR) exchange rate could be in for further gains in the coming week.
Despite the Euro’s (EUR) own weakness amid German growth fears, the South African Rand (ZAR) remains highly unappealing overall, and US-China trade war fears continue to dominate markets.
Any signs that US-China trade relations are improving could offer the Rand some stronger support, but Rand investors will also be closely watching for next week’s upcoming South African growth rate data.
As for the Euro, German and Eurozone economic sentiment will continue to influence the shared currency’s movement.
Major Eurozone data including Markit’s final August PMIs, German factory orders and industrial production, and Eurozone growth rate projections, could influence the Euro to South African Rand (EUR/ZAR) exchange rate throughout the week.