Globally all eyes turned to the better than expected US data released yesterday, which had the dollar and the USD-ZAR firmly on the front foot again.
Locally the economic data released yesterday did little to avert the weakness in the rand after the GDP grew only 1.3% in the first quarter of 2015 (1.5% was expected by market consensus). This is a sharp fall from the 4.1% q/q rebound in the last quarter of 2014.
A separate release from Stats SA showed that the unemployment rate rose to a record high of 26.4%.
While the weak South African GDP data and the disappointing unemployment data weren’t the immediate drivers of the rand weakness (rand traded in-line with EMEA peers), these releases underline the structural weakness of the local economy and the inability to generate enough jobs. Further outbreaks of social unrest remain a very real risk under these conditions.
The USD-ZAR broke through the 12.0500 target that we mentioned yesterday and could now look to target May highs towards the 12.1500 mark. A break above 12.1500 brings the 12.2000/3000 region into play, where the pair should meet a fair amount of resistance.
All in all not the news we would like to report 🙁