The South African Rand ended last week in the green, strengthening against most major currencies. The GBP/ZAR pair made the most pronounced movement, falling by 1.28% during last week’s trade. After opening at R19.65 on Monday, the pair closed the week around the R19.40 mark. In addition, the USD/ZAR and EUR/ZAR pairings fell by 0.25% and 0.34%, respectively.
Last week, the South African unemployment rate for Q1 of 2022 was released. The unemployment rate came in at 34.5%, edging lower from the previous reading of 35.3%. This figure was lower than expected, with markets anticipating another consecutive increase in unemployment.
South Africa’s balance of trade for April was also released last week. The country’s trade surplus narrowed to R15.49 billion during the observed period, from an upwardly revised R47.20 billion. Exports slipped by 19.1% from a month earlier, while imports fell at a slower 2.9%.
For global data, the US nonfarm payrolls report (NFP) for May was released. The latest NFP came in at 390,000, exceeding estimates of approximately 325,000. Although this reading was higher than expected, the report indicates a decline from the previous month’s 436,000 figure. The US unemployment rate for May was 3.6%, remaining flat from the prior month, despite a forecasted move down to 3.5%.
Additionally, the updated inflation rate for the Euro area was released. Inflation came in at 8.1%, compared to previously recorded 7.4%.
South Africa’s Q1 GDP growth rate will be released today, 7 June. GDP growth is expected to come in at 1.0% after the figure of 1.2% was recorded for the previous quarter. The South African current account balance for Q1 will also be released. The current account surplus is expected to rise again, towards R150 billion, after contracting to R120 billion in the fourth quarter of 2021. Additionally, the SACCI business confidence index for Q2 will be released this week. April’s figures for gold, mining, and manufacturing production will be released on Thursday.
Globally, it is worth keeping an eye out for the next recording of the US inflation rate. Inflation is expected to come in at 8.3% (YoY) for May. Additionally, the US balance of trade will be released in April. The country’s current trade deficit is expected to narrow, from $109.8 billion in March, towards $90 billion.
Over in the Euro area, investors will keep an eye on the GDP figures, to be released on Wednesday, for any signs of economic recovery. This will be proceeded by the ECB interest rate decision, although this is expected to remain unchanged. Rhetoric from the ECB remains hawkish as a downscaling and conclusion of the APP is being discussed as well as a potential rate hike later in the year.
Upcoming market events
Tuesday 7 June
ZAR: GDP growth rate (Q1)
USD: Balance of trade (April)
Wednesday 8 June
ZAR: SACCI business confidence (May)
EUR: GDP growth rate (Est. Q1)
Thursday 9 June
ZAR: Current account (Q1)
EUR: ECB interest rate decision
Friday 10 June
USD: Inflation rate (May)
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