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US Dollar South African Rand (USD/ZAR) Exchange Rate Rises as US House Prices Improve

August 27, 2019 - Written by John Cameron

USD/ZAR Exchange Rate Edges Higher despite US-China Trade Uncertainty

The US Dollar South African Rand (USD/ZAR) exchange rate edged higher today, with the pairing fluctuating around 15.323R as US house prices rise in June.

Today saw the US Housing Price Index for June rose by 0.2%, although these fell below the forecast 0.3% increase.

Analysts at Reuters commented:

‘U.S. house prices rose solidly in June, but the pace of appreciation is slowing, which together with declining mortgage rates could boost the struggling housing market.’

US S&P Case-Shiller Home Price Indices eased from 2.4% to 2.1%.

However, the US Dollar has benefited from comments from US President Donald Trump who has claimed that China is ready for a trade deal.

Geng Shuang, the Chinese Foreign Ministry Spokesman, has however denied any calls between the US and China regarding a possible US-China trade deal in the near term. As a result, this has clipped some of the US Dollar’s gains against ZAR today.

ZAR/USD Exchange Rate Sinks as Risk-Sentiment Dwindles on US-China Trade Uncertainty

The South African Rand (ZAR) has continued to struggle on growing concerns over the US-China trade war which is having a knock-on effect on global economic growth and heightening market risk-aversion.

S&P Global were downbeat in their assessment, saying:

‘These recent events have shaken investor confidence further, and incrementally worsened the global business and economic outlook.’

Meanwhile, the focus is remaining on South Africa’s anti-corruption official and Public Protector Busisiwe Mkhwebane who is in a major court battle with South African President Cyril Ramaphosa.

Ongoing political uncertainties in South Africa are weighing on market sentiment in the risk-averse South African Rand today.

USD/ZAR Outlook: US Economic Developments in Focus

South African Rand traders will be looking ahead to Thursday’s publication of the South African Producer Price Index for July, which is expected to ease from 5.8% to 5.4%.

Month-on-month figures are also expected to fall from 0.40% to 0.15%.

US Dollar traders, meanwhile, will be awaiting Thursday’s publication of the flash US growth figures for the second quarter. As these are expected to ease from 2.1% to 2.0%, we could see the US Dollar begin to lose some of its gains against the South African Rand.

The USD/ZAR exchange rate will likely remain volatile this week as fears over a US economic recession are continuing to provide downward pressure on the ‘Greenback’.

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TAGS: American Dollar Forecasts South African Rand Forecasts

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