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JOHANNESBURG – The rand edged up against the dollar yesterday, but trading is expected to be cautious ahead of US labour data due later this week and interest rate decisions by major central banks. The unit was at R9.8960 to the dollar at 0641 GMT, 0.3% firmer than its close in New York on Monday.
Solid manufacturing data on Monday helped keep the rand steady, firmer than the psychologically key 10 level. The Kagiso Purchasing Managers’ Index rose in June, staying above the 50 point mark for the third straight month, partly on signs of a recovery in the US economy.
The US is due to release non-farm payrolls data on Friday, which is expected to give an indication of the strength of the economic recovery as the market awaits further details on the Federal Reserve’s plans to scale down its bond-buying programme.
The European Central Bank and Bank of England will also announce their interest rate decisions tomorrow.
“We still think that the rand is unlikely to strengthen beyond R9.80/dollar, but much will depend on this week’s US labour data, which will be critical to expectations about the Fed’s start of ‘tapering’… and, hence, for global investor attitudes to risky assets like the rand,” Absa Capital wrote in a note.
Government bonds were slightly firmer as they continued to recover from a selloff last month, with the yield on the 2015 paper down 6 basis points at 6.075% and that on the 2026 issue 1.5 basis points lower at 7.875%.
South Africa will sell R2.35bn in 2031, 2041 and 2048 government bonds at 09:00 GMT. — News24
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