Johannesburg - South Africa's rand weakened in morning trade on Tuesday as encouraging economic reports in the United States pushed the dollar higher.

At 08:44 SA time, the rand had fallen 0.2 percent from its New York close to 10.6250 per dollar, nearing a four-day high it touched in the previous week.

The dollar was buoyed by a report showing home-builder sentiment in the United States at a seven-month high.

The world's largest economy is seeing a recovery that has strengthened the dollar against most major and emerging-market currencies.

The release of the US consumer price index later in the session will be watched by rand traders for any uptick in inflation, which would make an early interest-rate increase by the Fed more likely and strengthen the dollar further.

Analysts polled by Reuters predict no change in inflation.

Locally, Statistics South Africa publishes CPI data for July on Wednesday, with economists polled by Reuters predicting a slight decrease from 6.6 percent to 6.4 percent year-on-year, still outside the bank's target of 3 to 6 percent.

“Households continue to be hammered by rising living costs that are not necessarily fully reflected in the official CPI numbers,” ETM Analytics said in a morning note to clients.

“This is one reason why low interest rates have been ineffective in providing a positive boost to the economy.”

Government bonds were flat, with yields on the 2015 paper as well as bonds due in 2026 unchanged, at 6.63 percent and 8.31 percent respectively. - Reuters