Volatility is the name of the game as the Rand continues to rise and fall

The economic data releases last week weren’t anything exceptional for South Africa, with the trade balance shrinking, meaning South Africa imported more than it exported. Other local data also could not be blamed for the moves we saw in the Rand last week. Rather, it was a combination of international factors that drove the Rand up and down.

The escalating trade war rhetoric from the US does not bode well for the South African economy. Increased trade tariffs could lead to higher inflation and lower growth worldwide, which typically hammers emerging markets disproportionately as investors seek refuge in less risky investment destinations. With Trump changing his tune on US import tariffs, it’s going to become increasingly difficult for investors seeking solid ground.

US growth contracted slightly in the past week, but this did not hinder the USD. The greenback, in spite of all the trade war sabre-rattling, or perhaps because of it, maintained its strengthening momentum. In the Eurozone, inflation picked up slightly, which is being cited as a positive for the EUR.

Internationally, there is not a lot of data being released this week. In South Africa, however, we do have first-quarter GDP data being released on Tuesday. Forecasts vs. expectations are extremely varied, with some predicting 1% growth and others a 0.5% contraction. This will be a major risk factor for the ZAR and should be monitored closely. Later in the week, South African manufacturing data is due out too.

Date	What’s happening	Why it’s important
Tuesday	SA GDP Growth Rate	Expectations are varied – if growth surprises on the upside we should see ZAR strength.
Wednesday	Australian GDP data	This is expected to increase, it should strengthen the AUD and would be a good time to send funds from AUD.
Thursday	SA Manufacturing Data. Eurozone GDP Growth data	If this does improve, we should see ZAR strength. Increased Eurozone GDP growth will indicate a recovery in the area
Friday	Chinese Balance of Trade Data	Balance of trade is expected to shrink, meaning China is importing less, which is bad for SA.

 

– Sebastien Steyn