The South African rand hit a landmark low against the dollar yesterday with USDZAR breaching the 14.00 level for the first time ever as the South African Reserve Bank maintains its stance on refusing to intervene and we approach the FOMC meeting next week. Whilst expectations for a rate hike from the Federal Reserve this month have been scaled back, the Chinese story continues to dominate, in particular for those countries such as South Africa that have a large export exposure to China. As Africa’s second largest economy continues to slow, the concoction of all these ingredients makes any upside for the rand hard to see, especially if the China story continues to show a rapidly slowing economy.
Today the US markets return after their Bank Holiday and the economic calendar is a little busier. This morning sees another reading of Q2 Eurozone GDP figures which are expected to confirm the block’s economy slowed from 0.4% growth in Q1 to 0.3% in Q2, but given that we know of the Euozone’s sluggish growth we’re unlikely to see any big moves in the euro unless the figure is worse than expected, which could lead to some weakness.