CAD and ZAR Forex Trading Update
ZAR Forex Trading
Over the last week, South African data pave the way for lower rand interest rates.
The two South African figures that mattered were Tuesday’s GDP numbers and Wednesday’s consumer price index (CPI) data. Both were interesting. GDP grew by 3.2% in the second quarter, a touch lower than the analysts’ consensus. (Germany was the top European performer at 2.2%.) CPI inflation slowed from 4.2% to 3.7% in July, also lower than economists had predicted.
There could be interest rate implications in the two numbers. The South African Reserve Bank’s monetary policy committee meets next week and will inevitably discuss a reduction in its policy interest rates. Since June 2008 the SARB ‘repo’ rate has been moving lower, from 12% to its current level of 6.5%, reached in March this year. Between then and now analysts have been making on/off predictions that the SARB had a further – and possibly final – cut in its pipeline.
Last week’s figures have persuaded the market that there is a 60% chance of a 50 basis point (half percentage point) rate cut next week. Some say the likelihood is lower than that but even if we settle on 50/50 the chances are that the SARB will relax policy at some point in the next couple of months. This may or may not affect the Online CFDs markets.
CAD Forex Trading
Also in the last week, Canadian retail sales rise in June but only because of discounting.
The Canadian economy had just as little to say for itself. The only important figures were for retail sales in June and they were self-contradictory. Retail sales increased by 0.9% on the month (hooray!) but in value terms were only up by 0.1% (boo!). Retailers boosted their volumes by discounting prices. Average retail prices have fallen in every one of the last five months and the pace of that decline has been accelerating. As a method of boosting turnover it has been a success but it is not a strategy that can be extended indefinitely.
Weekly update by www.moneycorp.com, Foreign Exchange since 1979.