The Euro made considerable gains against the South African Rand (EUR/ZAR) last week, owing partly to hesitancy on the part of the European Central Bank (ECB).
- Euro closed trading up against the Rand last week – 16.21 rate seen for EURZAR
- ECB froze interest rate at 0% – President Draghi kept quiet on future policy decisions
- Rand rallied on GDP data last week – Production drop saw fall from grace
- Eurozone employment stats due Tuesday – ZA retail sales figures out Wednesday
The Rand (ZAR) climbed last Tuesday, but came crashing down on Thursday to close the week trending lower against the Euro (EUR).
Euro Exchange Rate News: ECB President’s Reserve Triggered Euro Rally Last Week
The Euro received a major boost against the South African Rand (EUR/ZAR) from an unlikely source last week.
This was European Central Bank (ECB) President Mario Draghi, who was giving a press conference in the wake of yet another ECB interest rate freeze at 0%.
Although Draghi had been broadly expected to announce major policy adjustments, mainly focussing of measures such as quantitative easing, the policymaker was largely quiet on the matter, instead repeating previous statements to a large extent.
Among these were the lines;
‘Interest rates have to stay low for the economic recovery to proceed, and to firm up. That, in the end, will have a positive impact on bank balance sheets too’.
Among Draghi’s non-covered topics were the possibility of buying shares and deploying ‘helicopter money’, both of which he made simply denied having discussed with colleagues.
By Friday, the Euro closed of trading at 16.13 against the Rand.
South African Rand Rocked after Surprising GDP and Production Results Came In
The South African Rand (ZAR) was a victim of circumstance last week, having initially risen dramatically after the Q2 GDP growth rate results came out on Tuesday.
The actual results saw a rise from -1.2% to 3.3% on the quarter and from -0.1% to 0.6% on the year, both of which bettered forecasts.
The positivity generated by this news persisted into Wednesday, when the Q3 business confidence score rose from 32 points to 42.
As part of the usual economic data balancing act, however, Thursday’s mining and manufacturing production results saw significant declines on the month and the year in July; the one bright spot was the fact that annual gold production rose from -1.3% to 2%.
This large dose of negativity resulted in the Rand flopping against virtually all of its major peers; against the Euro, the Rand closed the week’s trading in the region of 0.06.
Future EUR ZAR Forecast: Eurozone Employment and South African Retail Results Expected Next Week
The next notable Eurozone data to watch out for will come on Tuesday, when the Eurozone employment change results for Q2 are due out. The quarterly result has a reprint at 0.3% forecast, but a slight decline from 1.4% to 1.2% is expected on the year.
Other Eurozone news due on Tuesday will include Germany’s finalised August inflation rate data, as well as the ZEW surveys for September for both Germany and the Eurozone.
South Africa will have a less busy week, with its only real data release set to be Wednesday’s July retail sales figure; this is predicted to rise on the month but fall by a minor amount on the year.
Recent EUR, ZAR Exchange Rates
The Euro South African Rand (EUR ZAR) exchange rate was trending in the region of 16.1250 and the South African Rand Euro (ZAR EUR) exchange rate was trending in the region of 0.0618 recently.