Rand under pressure in wake of good US data and bad local Statistics

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 🙁

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