The Euro was trading at its lowest level in three-weeks against the South African Rand (ZAR) on Wednesday as disappointing data out of Germany and comments by ECB policy makers damaged investor sentiment toward the single currency.
The Euro also fell against the USD and GBP with the latter surpassing the 1.20 mark.
The single currency fell after ECB policy makers suggested that the regions Central Bank is considering using negative interest rates and other measures to tackle the threat of deflation. Weak confidence data out of Germany also weighed on sentiment.
The South African Rand found support from a recovery in global risk sentiment which boosted demand for the higher yielding asset. Hopes that China will introduce monetary easing measures increased following the release of a string of weak economic data reports also buoyed the market and emerging market currencies.
South African traders are particularly hopeful that some sort of measures will be introduced due to China being a major consumer of South African goods and commodities. Any weakness in China often has a negative impact upon the Rand and would put pressure on an already struggling export sector.
The Rand is likely to see volatility on Thursday due to the publication of the South African Central Banks latest interest decision. Most economists are expecting the bank to maintain rates at 5.5%.
“The latest bout of Rand strength has seen the market erring on the side of caution and gravitating towards a 25 basis point hike or no-move scenario,” said Thando Vokwana, a bond trader at Rand Merchant Bank.
Euro (EUR) Exchange Rates
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