The rand was a touch weaker from its overnight levels in in quiet morning trade on Wednesday as the market waited for direction. No major data releases were due today.
“We have no data out today, so we will take our direction from what happens to the euro. The support level for the euro is at $1.2950, so if that goes, then we could see the rand move above R8 to the dollar, but for the moment the euro is refusing to die,” a local trader said.
At 08:41 local time the rand was bid at R7.9142 to the dollar from Tuesday's close of R9.9010 and Monday's close of R7.7983. It was bid at R10.2727 to the euro from R10.2639 before, and at R12.7592 against sterling from R12.7580 previously.
The euro was bid at US$1.2984 from Tuesday's close of $1.2992 and Monday's close of $1.3057.
RMB said in its morning comment that with little on the data front, the European debacle remained the market's focus.
“There is likely to be little news to affect, leaving us swinging with sentiment over the entire mess. Direction on markets remains unclear but we can be certain about the continuation of uncertainty. All markets have been smacked by Europe, but none more so than commodities, with the oil price extending its 5-day losing streak yesterday and copper posting the biggest decline in a month amid demand fears and the stronger dollar. Gold's safe-haven status has continued to fall out of favour with investors and the metal plunged through US$1,600/oz in overnight trade, erasing nearly all of this year's gains,” the bank said.
Dow Jones Newswires reported that the euro and other higher-yielding currencies remained under pressure in Asia on Wednesday as political turmoil in Greece continued to fuel concerns about a rekindled European debt crisis.
The single currency failed to get a firm footing above the $1.3000 threshold and stayed just below that mark for much of the Asian day, as failed coalition talks in Greece after elections over the weekend raised the possibility that Athens may not get an international bailout package next month.
“The focus is on the formation of new government,” said Yuji Saito, director of the foreign exchange division at Credit Agricole Bank in Tokyo, as the country will not receive international financial aid if it can't meet a June deadline for the submission of austerity measures.
The euro could stay vulnerable to falls in the near term as protective euro buying to prevent sizable options orders from lapsing at $1.2950 may diminish later this week, Saito said.
“If that point is breached, the euro's fall to $1.2700 could be in sight,” he said. - I-Net Bridge