The rand was flat in early trade on Monday as traders eye data in Europe for direction.
“The rand has traded consistently within an 8.05-8.55 range against the US dollar for more than three months‚ but now that northern hemisphere participants are back to their desks in earnest after the summer holidays‚ we believe there could be more decisive rand price action‚” Absa Capital said in its morning report.
“We still favour a downside break (ie‚ rand bullish) of this range over the coming months‚ but much will depend on the outcome of this month’s deluge of critical events and the outcome of the high-frequency data flows‚” it said.
At 8.26am‚ the rand was bid at R8.1930 to the dollar from R8.1881 at Friday’s close. It was bid at R10.4763 to the euro from its previous close of R10.4752 and at R13.1022 against sterling from R13.1038 before.
The euro was bid at US$1.2785 from $1.2796 at Friday’s close.
“This week is laced with important international developments‚” Absa Capital said.
“On Wednesday European Union (EU) officials will provide more details surrounding the EU banking union. This will be accompanied by the outcome of the German Constitutional Court ruling on the European Stability Mechanism (ESM)‚ as well as the results of elections in the Netherlands.”
“Rand bulls will be hoping for ESM ratification out of Germany and more stimulus from the US Federal Reserve. Such an outcome could propel the rand down to the lower realms of the aforementioned trading range‚ if not the 8.00/US dollar-handle‚” it said. - I-Net Bridge