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US Dollar to South African Rand (USD/ZAR) Exchange Rate Forecast: US Retail Sales and Inflation Ahead

US Dollar Currency Forecast

The US Dollar to South African Rand (USD/ZAR) exchange rate recorded gains during Monday’s European session after South Africa’s Manufacturing Production took a dive in November.

The Rand was pressured lower when the manufacturing sector (which is South Africa’s fourth largest area) registered a -2.1% contraction in November, despite forecasts for a 0.9% rise. The annual figure fell to -1.3% from the former 2.3%.

Meanwhile, the US Dollar has been bullish against other majors as investor’s price in a rate hike by the US Federal Reserve in the near future. However, Monday saw weakness in the US Dollar exchange rate during choppy trading.

Market Analyst Joe Manimbo commented: ‘ A little air seeped out of the Dollar rally last week after weak US wages splashed some cold water on prospects for a Fed rate hike by midyear. The Fed is closely eyeing jobs and inflation to decide when to move its key lending rates higher.’

US Dollar to South African Rand (USD/ZAR) Exchange Rate Forecast

Looking ahead, Wednesday could be a day of influence for the South African Rand to US Dollar (ZAR/USD) exchange rate with the release of the KAGISO Manufacturing Purchasing Manager Index (PMI). The December figure is expected to soften from 53.3 to 53.1—a development that could see the Rand soften.

In addition, Wednesday will also see the release of South African Retail Sales stats which are also forecast to decline on an annual basis. On the month, South African Retail Sales are forecast to grow by 0.19% in November after October’s 0.40% advance. Annual Retail Sales are expected to decline from 3.5% to 2.2%.

Meanwhile, it could also be an influential week for the US Dollar, with Advance Retail Sales and Consumer Price Index (CPI) ecostats published. Friday’s non-core inflation figure is expected to see a drop from 1.3% to 0.7%, while the index excluding food and energy is forecast to remain at 1.7% on the year in December.

Any drop in inflation could offer support to dovish Federal Reserve officials who are promoting ‘patience’ before hiking rates. US Advance Retail Sales could also be disappointing on Wednesday with predictions for a -0.1% number in December after November’s 0.7% growth.

The US Dollar to South African Rand (USD/ZAR) exchange rate is trending in the region of 11.5293.