Although the Rand held relatively steady against the Pound as the European session opened, it edged away from yesterday’s four-year low against the US Dollar.
At the current exchange rate 1 Pound will purchase 15.8969 South African Rand as of 12:45 GMT
In response to the Rand’s movement currency strategist John Cairns asserted: ‘Emerging-market currencies have managed to claw back some losses. [In some cases the] rebound has been assisted by some aggressive central bank action.’
However, the USD/ZAR outlook remains negative.
Yesterday’s US initial jobless claims report, which showed that the number of American’s filling for unemployment benefits for the first time fell to the lowest level for five years pushed the Rand to a multi-year low of 10.4450 against the ‘Greenback’.
Although the Rand went on to recover some lost ground (largely thanks to commodity-currencies receiving a boost from better-than-forecast data for China) today’s US new home sales report could boost the US Dollar against South Africa’s currency if it surprises to the upside.
Economists have forecast that new home sales declined by -2.0 per cent month-on-month in July after advancing 8.3 per cent in June.
The GBP/ZAR exchange rate hit a low of 15.7628 Rand per Pound
As analysts with Absa Capital commented: ‘Although yesterday’s pullback appears warranted, we still doubt that the Rand will manage to sustain this recovery over the coming weeks and months because of the portfolio implications associated with the Fed’s quantitative easing tapering activities.’
The Rand has also been feeling the pressure this week as a result of a domestic strike in the auto sector and labour action threats in both the construction and gold mining sectors.
Against the Pound the Rand briefly weakened to 16.0746 after the British currency was boosted by a stronger than expected UK growth report, however a downward correction brought the GBP/ZAR pairing back below 16 per Dollar as trade progressed.
If this afternoon’s consumer confidence index for the Eurozone shows improvement it could support the trade-reliant Rand, but with Fed easing remaining the main driver of market movement investors are already beginning to focus on next week’s US news, including durable goods orders, consumer confidence, second quarter GDP and consumer sentiment reports.
Current South African (ZAR) Exchange Rates:
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The US Dollar/South African Rand Exchange Rate is currently in the region of: 10.1900 <
The Pound Sterling/South African Rand Exchange Rate is currently in the region of: 15.7628 <
The Euro/South African Rand Exchange Rate is currently in the region of: 13.6446 <
The Australian Dollar/South African Rand Exchange Rate is currently in the region of: 9.2344 >
The New Zealand Dollar/South African Rand Exchange Rate is currently in the region of 8.0742 <
The Canadian Dollar/South African Rand Exchange Rate is currently trading in the region of 9.7429 <
(Correct as of 12:45 GMT)
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