USD/ZAR: Rand extends losses as investors look to key CPI data

The South African Rand extended last week’s 4.77% loss against the US Dollar on Monday, as the risk-sensitive currency may be affected by the release of key inflation figures out of major economies later in the week.

The Rand’s retreat last week came amid a broad risk aversion stemming from the US credit rating downgrade. Still, that loss was pared after the dollar softened on the back of a smaller-than-expected US jobs growth in July.

“Looking at the week ahead, currency markets will be focused on the release of inflation readings out of China, Germany and the United States,” Rand Merchant Bank analysts wrote in an investor note, cited by Reuters.

“This data can recalibrate the market’s outlook on monetary policy once again, which will feed directly into currency prices, thus a cautious start to the week is envisaged.”

German annual inflation rate, due out on Tuesday, probably slowed to 6.2% in July from 6.4% in June.

Germany’s harmonized CPI inflation probably slowed to 6.5% in July, according to market consensus, from 6.8% in June.

Additionally, China’s inflation numbers for July are expected to be released on Wednesday.

And, the US CPI inflation data for July will be released on Thursday. Annual core CPI inflation is expected to slow to 4.7% from 4.8% in June.

As of 8:41 GMT on Monday USD/ZAR was gaining 0.86% to trade at 18.5958. Last week, the exotic Forex pair went up as high as 18.7769. The latter has been the pair’s strongest level since July 11th (18.8022).