The rand was weaker against major global currencies on Monday afternoon‚ with both global events and local news providing few reasons to cheer.
Disappointing Chinese economic data earlier‚ the expectation of the US’s imposition of sanctions later in the week and a disappointing reading of domestic manufacturing confidence‚ were among the factors weighing on the local currency.
The euro was also on the back foot against the dollar‚ ahead of critical talks between the members of German chancellor Angela Merkel’s government on Monday afternoon.
This sent the yield on German bonds to their weakest level in five months‚ while European equity markets were also lower.
The question at hand was why the euro had not weakened even further‚ given the spate of bad news‚ said BK Asset Management MD Boris Schlossberg. This resilience was perhaps suggestive of the fact the market was expecting German politicians to compromise on the issue of migration‚ given the likely economic consequences of not doing so.
Pressure on the euro was compounded by trade-war concerns‚ which continued to weigh on investor confidence.
Reports surfaced at the weekend that the EU was considering imposing almost $300bn in retaliatory tariffs‚ should that country target European car imports.
There were also reports that US President Donald Trump was considering ditching the World Trade Organisation‚ which sets rules regarding the extent to which countries may impose protectionist measures.
Local news was also downbeat‚ with the Absa purchasing managers index coming in at 47.9 index points in May — its weakest reading since March.
At 3pm‚ the rand was at R13.8321 to the dollar from R13.7136. It was at R16.0674 to the euro from R16.0270‚ and R18.1384 to the pound from R18.1023.
The euro was at $1.1616 from $1.1685.
By: Karl Gernetzky – BusinessLIVE
Source: TMG Digital.