Johannesburg - The rand traded in a tight range on Friday, holding onto the previous session's gains ahead of a speech by the Federal Reserve Chair Janet Yellen which could give new direction to the U.S. dollar.

Comments from Standard & Poor's on Thursday that it was not looking to downgrade South African banks after a Moody's cut earlier in the week and a euro rally had reassured rand bulls in the previous session.

The local unit traded at 10.6910/dollar at 0640 GMT, slightly firmer than a 10.7055 close in New York on Thursday, but remaining within that day's range.

“The data calendar is void of important releases today, leaving all attention on the musings of a few people deep in the Rocky Mountains,” Rand Merchant Bank's John Cairns said in a market note.

Yellen will speak at the annual gathering of central bankers at Jackson Hole later in the session.

Cairns said after recent strong economic data out of the U.S. and hawkish FOMC minutes released this week, there are fears that Yellen could opt to bring forward a interest rate hike that was expected in the middle of next year.

“Any hawkish words from her and U.S. yields will rise, the dollar rally will resume and the dollar/rand's upside trend will be reinvigorated,” he said.

Government bonds were also stuck at the previous session's levels with yields at 8.215 percent on the 2026 issue and at 6.545 percent on the 2015 note.

The Treasury will be selling 800 million rand ($75 million US dollar) in 2038, 2022 and 2025 bonds linked to the consumer price index. Results are due after auction closes at 0900 GMT.