The rand was softer in early trade on Friday as concern about global growth hurt commodity-dependent currencies.
“The rand is taking a hit‚ together with other commodity currencies‚ on global growth concerns‚” a local trader said.
At 8.50am local time the rand was trading at R8.3449 to the dollar from R8.3186 at Thursday’s close and Wednesday’s close of R8.2261. It was trading at R10.4610 to the euro from its previous close of R10.4435 and at R13.2243 against sterling from R13.1825 before.
The euro was bid at US$1.2543 from $1.2558 at Thursday’s close and $1.2533 at Wednesday’s close.
RMB said in its morning report that the rand had been pushed weaker by poor global data and uncertainty over a third round of quantitative easing (QE3) but the adjustment seemed to be running out of steam.
“We are looking for USD/ZAR to stabilise in the low to mid-8.30s‚ the top end of the range in which it has gyrated over the past week.”
“Following the release of the Fed minutes‚ there was talk that QE3 was assured.”
“However‚ today there are doubts — maybe the good data over the past month means they’ll hold off from acting? Fed members are no help‚ with one saying black and the other saying white‚” the bank said.
“Purchasing managers index figures from China were unquestionably weak. We are a little surprised‚ however‚ by the negative reaction to the European figures — yes‚ they point to a continued recession‚ no surprise there‚ but they also suggest that the worst has passed.
“Stepping back a bit‚ the trading pattern over the past few weeks has been for rapid mood shifts‚ with no firm trend and unconvincing themes. It seems we’re all watching and waiting‚” RMB said.
“There is some positive news. We know now Spain has been negotiating behind the scenes with its eurozone partners about the conditionality that would be imposed in a bail-out programme. A programme could be in place by mid-September‚ opening the way for European Central Bank (ECB) bond buying and so a significant easing of market pressures.
“There are two reasonably important events today. In Europe‚ the Greek prime minister will be meeting with (German Chancellor Angela) Merkel and (French President Francois) Hollande. In the US‚ July durable goods orders are due for release.
“Gold is heading for its best weekly gain in over two months‚ amid speculation of further stimulus measures by the Fed and the ECB and US Republican talk about reinstalling the gold standard.
“Investor demand has remained robust‚ with gold exchange-traded fund holdings jumping to new record highs this week. Technical indicators suggest the yellow metal is likely to take a breather at current levels‚ with support at US$1‚630/oz‚” the bank concluded. - I-Net Bridge