Rand firms a bit but risk events loom
The rand was slightly firmer against major global currencies on Monday afternoon, faring well ahead of a host of risk events this week.
It appeared to brush off earlier poor economic data, with the Absa purchasing managers’ index (PMI) falling to 45.4 index points in May, well below the Bloomberg consensus of 48 points.
There was, however, some pressure on the dollar ahead of a US PMI print later. Pressure on the dollar has come amid fears that the US Federal Reserve may move to cut interest rates faster than expected, although other global central banks can be expected to remain accommodative as well, said BK Asset Management MD Boris Schlossberg.
At 2.05pm the rand had firmed 0.25% to R14.5534/$, 0.12% to R16.2758/€ and 0.36% to R18.3651/£. The euro was 0.14% firmer at $1.1184.
The benchmark R186 government bond had strengthened, with the yield falling four basis points to 8.435%. Bond yields move inversely to bond prices.
The rand was only the fourth-best performing emerging-market currency on Monday, but could be in for a volatile week, with a number of items on the agenda.
SA’s first-quarter GDP numbers are due on Tuesday, with the Bloomberg consensus for a 1.6% year-on-year contraction, while business confidence numbers for May are expected on Wednesday.
US nonfarm payrolls numbers are out on Friday and will also be closely watched. A number of speeches are scheduled by Fed officials, while investors are also looking for developments related to state-owned enterprises, notably Eskom.
TreasuryOne senior currency dealer Andre Botha said the rand could go either way in the next few days, and may firm below R14.50/$ or weaken to near R15 by the end of the week.
Source: businesslive.co.za
