adminTHE rand traded within a narrow range at midday yesterday as the market awaited the release of US data on Friday which could indicate the pace of further stimulus cuts by the US Federal Reserve. Indications of a stronger recovery in the US economy through job creation could boost the dollar and put pressure on emerging-market currencies, including the rand.
The rand has to break through the key resistance level of 10,47 to the dollar for its recent strength to be sustainable, analysts say.
The rand was at R10,6056 to the dollar from Tuesday’s close of 10,5754.
It traded in a narrow band between 10,57 and 10,63 for most of the morning.
Against the euro, the rand was at 14,6240 from its previous close of 14,5834 and was at 17,6478 to the pound from 17,5805 on Tuesday.
The euro was at $1,3790 from a previous close of $1,3794.
Rand Merchant Bank (RMB) said in a morning note that risk-on trade continued as global economies were more favourably disposed towards emerging-market currencies.
It said the rand was languishing between R10.51/ 52 and 10,61/ 62.
“We expect the rand to continue drifting within the ranges given the low event risk for the day,” RMB said.
That could change, however, after the European Central Bank (ECB) rate decision set to be announced today and with the release of US nonfarm payrolls on Friday.
Although the market is poised for a no-cut decision by the ECB a cut would be rand positive.
According to RMB, the US data are a much bigger deal.
“A better than expected read would send US yields higher, seriously denting the trend of resumed inflows into emerging markets which are very important,” RMB said.
The 10-year Treasury yield is already at 2,77 percent, just below the top end of its recent range of 2,8 percent. – Business Day.
Online Reporter