Sat. Apr 20th, 2019

ZAR reverses gains as the Dollar and Pound regain momentum

The past week saw the ZAR strengthen and then reverse all gains against the US Dollar and the British Pound.

The post ZAR reverses gains as the Dollar and Pound regain momentum appeared first on The South African.

zar reverses gains as the dollar and pound regain momentum - ZAR reverses gains as the Dollar and Pound regain momentum

This Rand report is brought to you by Sable International

This comes amid Sino-US trade upheavals and uncertainty with Brexit.

The previous week’s downtrend in the Rand saw a reversal on Tuesday, with the ZAR opening at around R14.44 to the Dollar and R18.10 to the Pound. It strengthened later in the day, closing at R14.34 to the Dollar and R17.96 to the Pound. This trend was mainly driven by politics in the UK and Rand strength.

Rand report graph 2018 12 18 - ZAR reverses gains as the Dollar and Pound regain momentum

Positive manufacturing data on Tuesday and better-than-expected retail sales data boosted the Rand until Thursday. The Rand opened stronger against the Pound on Thursday but was not able to hold onto the previous day’s gains, opening at R14.10 and closing at R14.18. This comes as the UK prime minister survived the no-confidence vote and investors became more optimistic on the US-China trade war.

Looking ahead, tensions around the UK Brexit deal look set to continue until the end of the year, as parliament postponed the vote. On the US front, investors reacted positively to China’s purchase of US soybeans amidst the ongoing trade war.

Date What’s happening? Why does it matter?
Tuesday 18 December German Business Climate     US Housing Starts Data     US Oil Stock Change  Sentiment on the German economy (one of the leading EU economies) has a significant influence in the rest of the EU Investment in housing can be a useful proxy for indicating the medium-term strength of the US economy US oil reserves can be used as an indicator of the oil price and the short-term performance of the manufacturing industry
Wednesday 19 December British Inflation Data Canadian Inflation Data US Interest Rate Decision   Higher inflation increases the money supply and usually devalues the local currency Higher US interest rates will lower the money supply and increase the value of the local currency relative to other currencies
Thursday 20 December Japan interest Rate Decision British Retail Sales Data British Quantitative Easing Data Retail Sales can be used as an indicator of economic performance and can lead to the strengthening of the local currencyQuantitative easing may devalue the local currency in the short term
Friday 21 December Japanese Inflation Rate British Consumer Confidence US Income Data Consumer confidence and income can be used to forecast household spending and medium-term economic performance

The post ZAR reverses gains as the Dollar and Pound regain momentum appeared first on The South African.

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