Rand retreats from 10.27 resistance

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NewRandMoney Reuters.

Johannesburg - The rand steadied against the dollar early on Friday, taking a breather as investors reacted to weak eurozone growth data and worried about violence in the platinum belt.

Friday's session is expected to be quiet, with few domestic and global events scheduled, which should keep the rand trading within the previous day's wide band.

The unit managed to rally through the 10.30 level earlier in the week, but failed to break past 10.2725, eventually retreating to a week low.

By 08:44 SA time, the local unit was at 10.4220 to the dollar, off a 10.4040 close in New York on Thursday.

“The rand has finally been caught up in profit-taking on risk assets as well as, more importantly, the euro adjustment,” Rand Merchant Bank said in a market note.

“This has not only relieved the pressure on the 10.30 level but is even starting to suggest some upside risks as moves extend to the 10.40s”.

Data on Thursday showed the eurozone economy grew much less than expected at the start of the year, increasing pressure on the European Central Bank to ease monetary policy at its next meeting in June.

South Africa's currency is performing worse than its emerging market peers during the sell-off, partly on investor worries about violence flaring up in the mines where the Amcu union has downed tools since January while it seeks higher wages.

Lonmin, one of the three strike-hit companies, said on Thursday it would consider going to court to try and stop the strike as some workers have faced violence and intimidation.

Yields on government bonds were caught up in the emerging market sell-off.

Dealers said they were seeing a “flight to quality” that supported American and German debt.

The yield on South Africa's benchmark 2026 bond climbed 7.5 basis points to 8.14 percent, with the 2015 note rising by the same margin to 6.62. - Reuters



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