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US Dollar South African Rand Exchange Rate Tumbles Amid Trade Optimism

South African Rand Currency Forecast

USD/ZAR Exchange Rate Slumps amid Upswing in Risk Appetite

The US Dollar South African Rand (USD/ZAR) exchange rate is currently straddling a three-week low as the pairing is undermined by a strong pick up in market risk appetite.

At the time of writing the USD/ZAR exchange rate is currently trading at around ZAR14.8262 down roughly 0.8% since the opening buzzer.

South African Rand (ZAR) Surges on Trade Deal Hopes

The South African Rand (ZAR) is riding higher this morning, as a risk-on mood prevails in markets.

This upswing in risk appetite comes on the back of lingering trade optimism, amidst hopes the US and China could still sign off on a ‘phase 1’ trade deal.

Following high-level trade talks in Washington last week, the US and China agreed to a partial agreement, Branded by Donald Trump as a ‘Phase 1’ deal.

At the time Trump also proclaimed it to be ‘one of the biggest deals that’s been made in a long time, with China’.

However subsequent developments appeared to pour water on the deal, with Beijing demanding further talks before it is signed off, and the US angering China after the House of Representative passed a bill aimed at protecting human rights in Hong Kong.

However it appears there is still a desire to see a deal done, with Treasury Secretary Steven Mnuchin suggesting that the two sides are still working on nailing down the deal.

Markets were quick to seize on the comments, propelling the Rand and other emerging market currencies higher in early trade.

US Dollar (USD) in the Doldrums as US Economy Showing Cracks

Meanwhile, the US Dollar (USD) remained on the back foot this morning amidst growing concerns over the state of the US economy.

This was triggered by the release of the latest US retail sales figures on Wednesday which revealed a worrying drop in consumer spending last month.

Analysts at Wells Fargo explain the significance of the drop:

‘This report is the first hard data to indicate cracks in one of the key pillars of the economy that, so far, had been holding up rather well.’

The US Dollar may have further to fall as well, with data published on Thursday afternoon expected to show that industrial production also contracted in September.