Data expected to weigh on rand

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NewRandMoney Reuters.

Johannesburg - The South African rand was broadly flat against the dollar on Wednesday with investors bracing themselves for the release of indicators expected to show more weakness in the domestic economy.

The rand was a touch softer at 10.6035 per dollar at 08:57 SA time, little changed from its New York close of 10.6000.

The local unit slipped to a week-low in the previous session as jobs numbers showed unemployment had ticked up, revealing an underperforming economy.

Risk aversion caused by continued global tensions also weighed.

“Yesterday's data releases continue to paint a grim picture of the local economy,” Carmen Nel of Rand Merchant Bank said in a morning market note.

Thursday sees the release of producer price inflation numbers as well as trade numbers for June, with the latter expected to show South Africa's trade deficit widening to around 6.3 billion rand.

The release of second quarter US GDP numbers later in the session is also expected to put the rand under pressure as a rebound in the world's largest economy could spell a contraction of capital in-flows into the local economy.

“Given geopolitical tensions and the retracement in the rand, the unit is arguably more sensitive to an upside GDP surprise from the United States,” Nel added.

Government bonds were weaker, with the yield on the paper due in 2015 adding 3 basis points to 6.685 percent and the yield on the 2026 paper up 2.5 basis points to 8.255 percent. - Reuters


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