EUR/ZAR Exchange Rate Edges Higher Despite Growing Covid-19 Cases in Europe
The Euro to South African Rand (GBP/ZAR) exchange rate rose by 0.3% today, with the pairing currently trading around R19.395.
The Euro (EUR) rose against the South African Rand (ZAR) today following the release of the Eurozone’s Industrial Production figure for August, which rose by 0.7% in August.
Frank Prenesti, an analyst at ShareCast, commented:
‘European Union’s statistics office Eurostat said industrial production in the 19-country region rose 0.7% month-on-month in August and 7.2% year-on-year.
‘The fall was attributed to a steep decline in the capital goods output, offset slightly by higher production of durable consumer goods.’
Meanwhile, concerns are growing over the increasing number of Covid-19 cases throughout Europe.
As a result, we could see the single currency’s gains being short-lived as this could severely impact the Eurozone’s economic recovery in the months ahead.
South African Rand (ZAR) Falls as South African Economic Woes Continue
The South African Rand (ZAR) remained subdued against the Euro (EUR) following today’s release of August’s South African Retail Sales report, which fell by -4.2%.
Furthermore, risk-off market mood has weighed on the risk-averse ZAR today following news that the pharmaceutical giant, Johnson and Johnson, had paused its Covid-19 vaccine trials.
As a result, global markets are becoming increasingly jittery as the Covid-19 infection rate rises worldwide, particularly throughout much of Europe.
The International Monetary Fund (IMF) also reported on Tuesday that South Africa would maintain its 8% contraction in 20202.
Analysts at Reuters commented on the IMF’s report:
‘The [IMF] report said South Africa, which already has one of the world’s most unequal societies, will see inequality and joblessness worsened by the pandemic.
‘The strict lockdown that begun at the end of March caused the biggest ever quarterly contraction and cost more than 2 million jobs.’
EUR/ZAR Forecast: Could Global Economic Uncertainty Boost the Safe-Haven Euro?
Euro (EUR) traders will be awaiting tomorrow’s speech from Christine Lagarde, the President of the European Central Bank (ECB).
Any dovishness from the ECB would prove EUR-negative.
Tomorrow will also see the European Council Meeting. If this paints a bleak picture for the Eurozone’s economy in the months ahead, then the EUR/ZAR exchange rate could fall.
The South African Rand (ZAR) will remain sensitive to risk-sentiment this week. As a result, we could see ZAR suffer on any further signs of US political uncertainty.
Furthermore, ZAR would suffer from rising Covid-19 cases worldwide, as this would dampen confidence in risky assets as the global economy struggles to recovery.
The EUR/ZAR exchange rate will likely head higher this week, with demand for the safe-haven single currency likely to rise as global economic uncertainty increases.
