The South African rand is pinned down by the US dollar as the buck raises against drying trade war news. This week’s data from the country that were released today also weighed on the rand despite Monday and Tuesday’s gains.
The USD to ZAR trading pair rose by 0.57% or 0.0847 points this Wednesday’s trading session. The USD ZAR went up from its previous close of R14.7578 to R14.8425 today.
The pair also extended its gains from R14.7584 to as high as R14.8675.
Unfortunately for the South African rand, the greenback and other safe-haven assets found some support from trade war news. Although it was not that much, the lack of certainty about the direction of negotiations are making investors more cautious.
However, rising tension between the two economic giants over Hong Kong isn’t helping trade war hopes. The US House of Senate’s signal for bills that will protect human rights there received distasteful looks from China.
US dollar traders are also waiting for the official minutes from the US Fed’s last meeting. The US Federal Reserve’s minutes are due later in the day.
Dull Economic Figures
Aside from trade-related news, another reason for the pair’s decline is the lackluster results in the South African economy’s performance.
South Africa’s core consumer price index went down from 0.2% to 0.1% as expected on a month-over-month basis. Meanwhile, the Year-over-Year results even went lower to 3.7% from its previous record of 4.1%, beating projections of 3.9%.
The consumer price index measures the rate of price changes of products and services used by households in South Africa. The lower results are taken in by bullish rand traders.
Yesterday, the South African rand managed to gain against the US dollar and other currencies. It received support from risk assets and after Eskom hailed their new CEO.
Despite new leadership, Eskom remains one of the main threats to South Africa and its credit rating.