Euro Bullish versus Volatile Rand (EUR/ZAR) Despite Both Exchange Rates Weakening
The EUR/ZAR currency pairing is currently trading in the region of 14.7004 with the Euro proving bullish despite both currencies recent weakening.
If you're looking to make an international money transfer, we recommend TorFX.
The Euro has fallen Monday after an unexpected drop in German Industrial Production data for May was published showing a fall of -1.8% MoM, much higher than last month’s -0.3% drop, despite being forecast to reside at 0.0%.
Nonetheless, Monday has also published Eurozone Investor Confidence figures which showed an unpredicted rise to 10.1 in July, growing from June’s 8.5 and bypassing predictions of a drop to 7.8.
Research agency Sentix has suggested that the rise in Investor Confidence will enable the Euro to benefit from the solid foundation forming.
Sentix stated: ‘After a four month weakening phase, growth expectations for the Eurozone are now stabilising. This stabilisation coincides with the new monetary policy measures of the European Central Bank. But the real boost for the Eurozone comes from the world economy [US and Japan].’
Tuesday will show the German Trade Balance which economists have forecast to fall from the current 17.4B to 16.2B, whilst Thursday is highly influential for the Euro revealing the European Central Bank Monthly Report.
Following this, Friday will see German Consumer Price Index data published which is currently forecast to stagnate at 1.0% YoY.
Conversely, the Rand is entering its second difficult week as the continued NUMSA metal workers strikes remain unsolved.
Moody’s credit rating agency stated: ‘Continued weak investment, exports and overall growth will pose serious challenges to the government’s efforts to rein in its budget deficit and stabilise its debt metrics, a credit negative for the economically troubled country.’
Last week General Motors had to suspend production in its main production site in South Africa responsible for the manufacturing of 50,000 auto-mobiles per year.
However Toyota and Mercedes Benz currently seem to have experienced little disruption to parts manufacturing and are not experiencing any immediate disruptions.
With the latest strike taking its toll on the prospects of the economy, the Rand is tumbling against other majors.
Barclays Africa have commented: ‘The balance of risks favours a weaker rand over the coming days.’
Furthermore, despite employers offering a 10% raise, the NUMSA union members are vowing to continue their strikes regardless of the violent effect it seems to be creating with added reports of vandalism.
In their defence NUMSA stated: ‘We have tried to ensure we’ve disciplined our members during this strike.’
NUMSA representative Irvin Jim further claimed: ‘I have convened a meeting with the Gauteng leadership of our four regions. The message that we are communicating to our members is that we have a historic duty of championing the poor. The failure to deal with anarchy or violence can only give ammunition to our enemies.’
It seems that in the near future the Euro will be able to remain the stronger counterpart of the Euro/Rand exchange rate with such volatility and political unrest prominent in South Africa.
However the Euro is weakening against other majors and may continue to fall against them dependent on the data released this week.