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Euro South African Rand (EUR/ZAR) Exchange Rate Slides as EU Trade Surplus with US Slips

Euro South African Rand (EUR/ZAR) Exchange Rate Edges Down as Eurozone Trade Surplus with US Falls

The Euro South African Rand (EUR/ZAR) exchange rate slipped and the pairing is currently trading at an inter-bank rate of R15.8447.

Data released this morning revealed that the Eurozone’s trade surplus in goods with the US fell in the first quarter of 2019.

However, its deficit with China widened.

Eurostat revealed that the bloc’s surplus with the US fell to €33.9 billion compared to €36.2 billion in Q1 2018 which likely dampened sentiment in the single currency.

South African Rand (ZAR) Rises as US Slaps Sanctions on Huawei

The US escalated trade tensions with China on Wednesday as they slapped Chinese telecoms giant Huawei with sanctions.

This escalation likely dampened risk-appetite, however the risk-sensitive South African Rand edged up against the Euro on Thursday.

The US Commerce Department added Huawei as well as 70 affiliates to its ‘Entity List’.

This bans the telecoms giant from acquiring technology and components from the US firms without United States government approval.

Commenting on the effects of the sanctions, Roger Sheng, Gartner Analyst said:

‘The impact is well-beyond its 5G ambitions because without these American suppliers like Qualcomm and Marvell, it can’t even keep a normal operation.

‘One question remains unanswered though, is how strict will the US execute the ban.’

Rand (ZAR) Rises on Reports of Further US-China Trade Discussions

On Thursday, the Chinese Foreign Ministry threatened reprisals over the Huawei sanctions.

It has warned that Beijing will take necessary measures to protect the rights and interests of Chinese businesses.

Meanwhile, US Treasury Secretary Steven Mnuchin stated he would visit China for further trade discussions which likely provided support to the risk-sensitive Rand.

However, China’s Ministry Spokesman Lu Kang suggested that the sanctions on Huawei could overshadow trade discussions.

He said:

‘Negotiations and consultations, to have meaning, must be sincere.

‘First, there must be mutual respect, equality and mutual benefit. Second, one’s word must be kept, and not be capricious.’

Euro South African Rand Outlook: Will the EUR Slide on Disappointing Eurozone Inflation?

Looking ahead to Friday, the Euro (EUR) could slip against the South African Rand (ZAR) following the release of the Eurozone’s Consumer Price Index (CPI).

If inflation does not rise as forecast in April, it could dampen sentiment in the single currency.

Meanwhile, the South African Rand could slide if there are further reports of an escalation of trade tensions between the US and China.

If China responds to the US sanctions on Huawei, it is likely risk appetite will continue to slide, and the Euro South African Rand (EUR/ZAR) exchange rate could rise.