Rand stronger, ECB to provide directionComment on this story
Johannesburg - Improved business confidence helped South Africa's rand strengthen against the US dollar on Thursday, while comments from the European Central Bank (ECB) should provide direction later.
The local unit edged towards the firmer end of a recent range, strengthening by 0.13 percent to 10.6750 per dollar by 08:27 SA time.
Business sentiment in South Africa recovered from a 15-year low in August, according to two surveys released in the previous session, giving the rand a much needed boost following a slide that saw it touch a three-week trough earlier in the week.
Comments by ECB head Mario Draghi due at 12:00 SA time, which could hint at future of interest rate and quantitative easing adjustments, should give the rand market direction.
“The ECB has a long history of confounding bullish expectations but, at the same time, has occasionally taken a sharp unexpected easing step,” said Rand Merchant Bank in a market note.
Rand traders will also keep an eye on US labour and manufacturing data releases later in the session and on Friday.
The indicators are forecast to show further improvement in the world's largest economy, possibly signalling policy tightening in the near future.
“If the meeting and tomorrow's US non-farm payroll number work in the same direction then the rand's moves could turn out to be large,” RMB added.
Yields on government bonds fell, the 2015 issue shedding 0.5 basis points to 6.56 percent while the yield on the 2026 paper dropped 1 basis point to 8.015 percent. - Reuters