Ahead of tomorrow’s UK consumer confidence data the Pound was weaker against the Rand.
The Rand initially declined yesterday after South Africa’s Finance Minister slashed his national growth projection.
As well as dipping against a supported Pound the Rand edged lower against the US Dollar and extended declines after the ‘Greenback’ was boosted by encouraging US housing data.
The USD/ZAR pairing began the local session little changed.
According to Barclays’ officials; ‘Better than expected US new home sales data added momentum to the US economic recovery and drove strength in the Dollar against the Rand and other emerging market currencies. This afternoon we look for further direction from US Federal Reserve Chairwoman Janet Yellen’s testimony on monetary policy before the Senate banking committee.’
The US Dollar was buoyed by the expectation that Yellen will reassert her commitment to slowly and steadily tapering stimulus over the next few months. Meanwhile, demand for emerging-market assets was slightly dampened by Ukrainian crisis concerns.
However, the Rand advanced on the Pound before PPI figures for South Africa were published.
Producer prices in South Africa advanced by 1.0 per cent in February, more than the 0.8 per cent gain expected.
On the year the factory-gate inflation rate for South Africa rose to 7.0 per cent from 6.5 per cent.
Economists had forecast a reading of 6.8 per cent.
The appeal of the Pound was also dented by the news that the Lloyds business barometer fell from 63 in January to 53 in February.
Although the UK economic recovery has continued into the new year, this report is another sign that the pace of that recovery is faltering somewhat as the rapid output witnessed in the second half of 2013 proves unsustainable.
If Janet Yellen uses today’s announcement to promote the continued trimming of stimulus, emerging-market currencies like the Rand could falter.
Further Rand movement could be occasioned before the weekend as a result of South African private sector credit and trade balance data.
Investors will also be looking ahead to Monday and the release of South Africa’s Kagiso manufacturing PMI.
Tomorrow’s UK consumer confidence report may have an impact on the GBP/ZAR pairing.
South African Rand (ZAR) Exchange Rates
[table width=”100%” colwidth=”50|50|50|50|50″ colalign=”left|left|left|left|left”]
Currency, ,Currency,Rate ,
Pound Sterling,
,South African Rand,17.8610,
Euro,,South African Rand,14.7336,
US Dollar,,South African Rand,10.7931,
Australian Dollar,,South African Rand,9.6290,
New Zealand Dollar,,South African Rand,9.0993,
Canadian Dollar,,South African Rand,9.8863,
[/table]
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