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Euro South African Rand Exchange Rate Steady, Germany Narrowly Avoids Recession in Third Quarter

EUR/ZAR Exchange Rate Flat, Eurozone Powerhouse Economy Avoids Technical Recession

The Euro South African Rand (EUR/ZAR) exchange rate held steady this morning, with the pairing currently trading around R16.441 after the Eurozone’s largest economy, Germany, narrowly avoided a recession with the quarter-on-quarter growth figure beating forecasts and rising by 0.1%.

Andreas Scheuerle, an Analyst at Deka Bank, commented:

‘The German economy got away with a black eye: the technical recession [is] avoided.’

‘Germany’s economy is suffering from enormous global political uncertainty. Germany’s flagship industry, the automobile sector, is not running smoothly anymore.’

However, the EUR/ZAR exchange rate remained unmoved, as uncertainty surrounding the UK’s position on Brexit and ongoing US-China trade tensions continue to weigh on market confidence in the European currency.

Today will also see a speech by Philip Lane, an Executive Board member of the European Central Bank (ECB). Any dovish comments about the European economy could see the Euro begin to fall against the South African Rand.

ZAR/EUR Exchange Rate Steady, US-China Trade Uncertainty Holds Back Rand

The risk-sensitive South African Rand (ZAR) failed to gain against the Euro (EUR) due to ongoing uncertainty surrounding the “Phase One” trade deal between the US and China, which still shows no signs of progressing this month.

With South African’s economy so heavily reliant on trade with China, complications between the world’s two largest economies hold back the risk-correlated Rand.

Makoto Noji, Chief Currency Strategist at SMBC Nikko Securities, commented:

‘If [US President Donald] Trump takes a hard line, emboldened by the latest strength in stock markets, and refuses to make some concessions to China, there will be risk an agreement cannot be reached at the last minute.’

As there are no influential South African economic data releases due out this week, investors will be focusing on global political and economic developments instead.

Any signs that the US and China could compromise on a “Phase One” trade deal this month would boost risk appetite and see the ZAR/EUR exchange rate begin to recover.

EUR/ZAR Outlook: US-China Trade Developments in Focus

Euro (EUR) investors will be looking ahead to tomorrow’s speech by Yves Mersch, a member of the Executive Board for the ECB.

Tomorrow will also see the release of the Eurozone’s Core Consumer Price Index figure for October, which is expected to hold at 0.1% on the month.

The South African Rand (ZAR) will continue to be driven by US-China trade developments this week. If the risk-off market sentiment continues to grow, we will see ZAR begin to fall against the common currency.