South Africa’s rand weaker, under pressure

was disappointed by Friday’s European Union summit, which did not offer a concrete deal to end the eurozone debt crisis.
Except for Britain, the EU states decided at a summit to pursue stricter budget rules for the single currency area and to provide up to 200 billion euros in bilateral loans to the International Monetary Fund to help tackle the crisis.
The rand was trading at 8,13 against the dollar, 0,56 percent weaker than Friday’s New York close of 8,0850.
“There are some aspects of the EU stance that are ok, but overall the market is disappointed with the deal,” said Warrick Butler, a dealer at Standard Bank.
“We might have a bit of a pullback on the rand up to that 8,20 level. The 8,18/20 level is a pivotal level but I don,t think the pullback will be too extended,” he said, adding the exporter sellers of dollar are likely to come in around 8,18/20.
Liquidity conditions are becoming thinner as holidays get underway domestically, so moves are likely to be exaggerated.
The rand has lost 23 percent against the dollar so far this year mainly due to eurozone worries. It has recovered from a 2-1/2 year low of 8,61 hit in November, but has now quite shaken off the weakness yet.
Domestic stock futures pointed to a slightly negative start on the bourse, with the Top-40 December futures contract down 0,11 percent before the start of trade.
Government bonds firmed a bit, with the yield on the 2015 bond down two basis points to 6,76 percent and that on the 2026 note falling by the same margin to 8,485 percent.
Focus on the domestic market will be on inflation data this week, with CPI out tomorrow.
The market is expecting CPI to rise to 6,2 percent year-on-year in November from 6,0 percent in October.
It would be breaching the 3 to 6 percent target band for the first time since January 2010, and the Reserve Bank expects it to stay outside the band for most of 2012. – Reuters.