Although China’s stronger-than-forecast manufacturing PMI bolstered commodity-driven currencies overnight, strong UK data helped the Pound to Rand (GBP/ZAR) exchange rate surge by 0.4%.
Yesterday South Africa’s Rand shrugged off less-than-impressive domestic trade data and traded in a narrow range against peers like the US Dollar and Pound.
The trade balance report detailed a deficit of 6.571 billion Rand in May following a deficit of 12.393 billion Rand in April.
Overnight the emerging-market asset failed to derive any support from the news that both of China’s Manufacturing PMI reports gave readings above the 50 mark separating growth from contraction in June.
While the result did boost other commodity-focused assets, like the Australian Dollar and New Zealand Dollar, demand for the Rand was limited ahead of the beginning of a nationwide strike by Numsa, South Africa’s biggest union.
According to the Rand Merchant Bank (RMB); ‘Rand volatility is on strike. There has been some talk that the Rand is struggling because of the Numsa strike… Rand moves, though, have been broadly in line with other high-risk currencies: if there is any underperformance, it is marginal. The better way of describing the Rand is just to say that it has been caught up in the global market stupor. Volatility everywhere has dropped to record lows and, while it took its time about it, the Rand has been caught up in the same apathy.’
However, during the European session the Rand was driven lower against the Pound by the release of unexpectedly strong UK manufacturing data.
The Pound to Rand exchange rate achieved a high of 18.2820 after Markit’s Manufacturing PMI for the UK advanced from 57 in May to 57.5 in June rather than slipping to 56.8 as economists had expected.
The Pound broadly strengthened after the report was released and could extend gains against peers like the Rand as the week progresses if the UK’s services and composite PMI (due out on Thursday) also exceeds expectations.
South African data to be aware of over the rest of the week includes South Africa’s consumer confidence report (out tomorrow) and the nation’s KAGISO Manufacturing PMI.
The manufacturing gauge is expected to come in at 48.7 in June, up significantly from May’s reading of 44.3 but still considerably below the 50 mark separating growth from contraction.
UPDATED 09:25 02 July, 2014
Pound to Rand (GBP/ZAR) Trending Higher
The Pound to Rand exchange rate retained yesterday’s gains and was trading 0.43% higher against the Rand on Wednesday.
While today’s UK construction output report will be of note (particularly if it follows yesterday’s manufacturing figures and surprises to the upside) movement in the GBP/ZAR pairing will also be triggered by South Africa’s Consumer Confidence report.
The gauge is expected to show that confidence worsened from -6 to -7 in the second quarter of the year.
UPDATED: 10:15 GMT, 03 July, 2014
Friday’s SA Manufacturing Report could cause GBP/ZAR Losses
The Pound to Rand (GBP/ZAR) exchange rate trimmed recent gains in response to a slightly disappointing UK Services PMI report.
The emerging-market Rand was also bolstered by yesterday’s upbeat domestic consumer confidence report and today’s impressive Chinese services figures.
Further volatility in the Pound to ZAR exchange rate could occur tomorrow as South Africa’s manufacturing gauge is issued.
The report is expected to show that South Africa’s manufacturing sector contracted at a slightly slower pace in June.
If the data surprises to the upside it will be Rand supportive.
South African Rand (ZAR) Exchange Rates
[table width=”100%” colwidth=”50|50|50|50|50″ colalign=”left|left|left|left|left”]
Currency, ,Currency,Rate ,
Pound Sterling,
,South African Rand,18.2548,
Euro,,South African Rand,14.5757,
US Dollar,,South African Rand,10.6602,
Australian Dollar,,South African Rand,10.0515,
New Zealand Dollar,,South African Rand,9.3188,
Canadian Dollar,,South African Rand,9.9728,
[/table]
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