Rand seesaws on ECB‚ US jobs data

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IOL world currency1 Graphic: Renjith Krishnan.

The rand was weaker than its overnight levels early on Friday morning‚ but soon regained some ground.

The local currency‚ along with the euro‚ had weakened sharply in late trade on Thursday‚ before recovering slightly‚ after the European Central Bank (ECB) took no immediate further action to deal with the eurozone economic crisis‚ disappointing markets after president Mario Draghi’s comments last weak.

At 08:41 local time the rand was bid at R8.3689 to the dollar from Thursday’s close of 8.3539‚ but by 09:14 it had strengthened to 8.3366. At 9:14 it was bid at R10.1710 to the euro from its previous close of R10.1737 and at R12.9458 against sterling from R12.9598 before.

The euro was bid at US$1.2198 from $1.2177.

Dealers were looking to the US monthly jobs data later in the session for some direction.

Absa Capital said in a note that better than expected US weekly jobless claims data on Thursday came in the wake of Wednesday’s encouraging ADP jobs report and both these outcomes had led some to believe the US may not be in dire need of another round of quantitative easing after all‚ which in turn contributed towards Thursday’s broad-based dollar strength.

“However‚ such upbeat sentiment surrounding the US growth outlook could quickly sour if today’s US employment report disappoints. Such an outcome could cause market expectations to quickly swing back in favour of an urgent need for more quantitative easing from the Fed‚ which in turn should bring about broad-based dollar weakness and‚ as a consequence‚ cause the rand to go into the weekend on the front foot‚ while the probability of a local rate cut should simultaneously subside‚” analysts at the bank said. - I-Net Bridge

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