Rand falls on poor Chinese trade data and euro optimism

Cape Town – The rand dropped to almost R13.70 to the dollar on Tuesday, following worse-than-expected trade data from China and euro optimism following the French election victory by Emmanuel Macron.

“Both Chinese exports and imports fell short of expectations, which weighed on metal prices and commodity currencies, such as the rand,” explained NKC Research on Tuesday.

Reuters reported that the rand dropped “as the euro and dollar piled on the pressure following a wave of relief sparked by Emmanuel Macron's resounding victory in Sunday's French presidential ballot”.

“For most of yesterday the rand traded around the R13.50/$ level, only to be taken up 10 cents right at the end of the South African session,” explained Umkhulu Consulting’s Adam Phillips on Tuesday.

“Even if there is a rally in the euro today, there is enough gloom around commodity prices to keep emerging market currencies on the back foot.

“Along with gold being at the bottom of its range, we have iron ore and copper also near four-month lows.

“It all looks rather jittery, and with investors keeping a firm eye on all the political events, the pressure on commodities will stay for a while despite general economic upliftment being seen across most of the globe.

“While the phrase going around financial markets is ‘Holy Macron-il’, Thursday and Friday will see important data coming out from the UK and the US, with a ‘Super Thursday’ happening as the BoE meets and also releases its quarterly inflation report, hence the expression.

“I doubt the bank will say anything that will rattle the markets, but we could see a couple of days of positioning before the press conference.

“The rand will follow what is going on from the majors, unless some local black swan event happens. The first resistance level will be 13.68, while the support will be at 13.52 and after that 13.45.”

GRAPH: Intraday rand/dollar movements from Sunday (Bloomberg)

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USD/ZAR
14.05
0.0%
GBP/ZAR
19.67
0.0%
EUR/ZAR
17.10
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AUD/ZAR
11.03
0.0%
JPY/ZAR
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Gold
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27.45
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