EUR/ZAR Exchange Rate Undermined by Trade Optimism
The Euro to South African Rand (EUR/ZAR) exchange rate is on the back foot this morning, in response to rising US-China trade hopes.
At the time of writing EUR/ZAR exchange rate is trading at around ZAR16.2195, down roughly 0.5% from this morning’s opening levels.
South African Rand (ZAR) Buoyed by US-China Trade Hopes
The South African Rand (ZAR) is trending higher this morning in light of renewed US-China trade optimism.
There has been a lot of conflicting headlines regarding US-China trade talks in recent days, with market left sceptical on the prospects of a preliminary deal being signed before 2020, despite Beijing’s insistence that talks are making solid progress.
However, some of these doubts have been dispelled now that US President Donald Trump has also suggested a breakthrough could be imminent.
Trump said:
‘We’re in the final throes of a very important deal, I guess you could say one of the most important deals in trade ever. It’s going very well but at the same time we want to see it go well in Hong Kong.’
ZAR exchange rates are highly sensitive to US-China trade headlines, given South Africa’s economy is particularly vulnerable to a slowdown in global trade.
Further buoying the Rand this morning was the publication of South Africa’s latest business confidence survey, with sentiment unexpectedly improving in the fourth quarter in spite of tough economic conditions in the country.
Euro (EUR) Undermined by Broad US Dollar (USD) Strength
Meanwhile, the Euro (EUR) is struggling to find support this morning as the single currency is undermined by a stronger US Dollar (USD).
The Euro is the most commonly traded pairing with the US Dollar, resulting in USD strength often taking its toll on EUR exchange rates.
This downtrend in the Euro is also motivated by the fragile outlook for the Eurozone however, with the bloc’s manufacturing sector continuing to be a point of pain for EUR investors.
EUR/ZAR Exchange Rate Forecast: Weak Inflation to Weigh on the Euro?
Looking ahead, the Euro South African Rand (EUR/ZAR) exchange rate may face some additional headwinds in the latter half of the week, with the publication of the Eurozone’s latest consumer price index.
Economists forecast that Eurozone inflation will have crept up this month, having struck a near three-year low in October.
However inflation is expected to have remained below 1%, likely putting the pressure on the ECB to implement more stimulus measures in 2020.
Meanwhile, US-China trade headlines are likely to remain a key catalyst of movement in the Rand through the remainder of the week.
Also influencing ZAR exchange rates will be the publication of South Africa’s latest trade figures, with the Rand potentially softening if the country posts a trade deficit in October as expected.