The rand was slightly weaker in early trade‚ with expectations high that the European Central Bank (ECB) will pare back interest rates later today and stimulate the moribund eurozone economy.
“The markets are looking at Europe for direction. We have a risk effect today in the form of expected rate cuts by the ECB‚ which will move the rand‚” a local trader said.
At 08:57‚ the rand was bid at R8.1404 to the dollar from its previous close of R8.1304.It was bid at R10.2020 to the euro from its previous close of R10.1752 and at R12.7027 against sterling from R12.6713 before.
The euro was bid at US$1.2532 from its previous close of $1.2518.
Absa Capital said in its morning report that‚ given that the rand remained closely governed by global sentiment‚ participants were likely to closely watch the outcome of today's policy meetings in Europe and labour data out of the US.
“We are expecting the ECB to cut rates by 50 basis points this afternoon‚ while the Bank of England is likely to increase its quantitative easing measures. If these additional stimulus measures are implemented‚ we would expect risky assets such as the rand to benefit‚” Absa said.
Meanwhile‚ Dow Jones Newswires reported that the euro is steady in Asia amid market caution ahead of policy announcements from the ECB and Bank of England.
Investors remained jittery about Europe as data revealed further economic weakness. Eurozone businesses retrenched further in June‚ causing private-sector activity in the second quarter as a whole to fall at the fastest rate in three years.
Bids:08:57 local time Range so far Previous Close
Dollar/Rand 8.1404 8.1187- 8.1609 8.1304
Euro/Rand 10.2020 10.1706-10.2226 10.1752
Sterling/Rand 12.7027 12.6608-12.7286 12.6713
Euro/Dollar 1.2532 1.2511 - 1.2539 1.2518