Johannesburg - South Africa's rand was steady against the dollar early on Tuesday with investors reluctant to take large positions ahead of key US data on Wednesday.

The rand was at 10.7745 to the dollar at 08:40 SA time, slightly weaker but not far off a 10.7710 close in New York on Monday.

Dealers said the rand was likely to weaken in the session, especially if US inflation and housing data comes out stronger than expected.

The rand has shrugged off local news in the past few weeks to track its emerging market peers, who have been suffering the fallout from geopolitical tensions in Ukraine and Russia.

Market developments in the United States, where the Federal Reserve's decision to scale back quantitative easing has hit the risky assets that had benefited from the extra money flows, have also been causing some volatility in the rand.

“We see the balance of risks as tilted towards continued rand weakness, but acknowledge that participants might only want to commit after some of Wednesday's events,” Barclays Africa analysts said in a note.

The Fed holds a monetary policy meeting on Wednesday, a few hours after South Africa releases retail sales and inflation data.

The numbers could move the bond market if they shift domestic inflation expectations.

Yields on bonds were up 5.5 basis points to 8.62 percent on the benchmark 2026 bond and 4 basis points to 6.97 percent on the 2015 note.

The Treasury has offered 2.35 billion rand over 2023, 2030 and 2048 bonds for auction in the session.

Results are due after 11:00 SA time.

Dealers expect clearing yields at or slightly below market levels. - Reuters