Rand firms ahead of Fed decision on rates

The rand was firmer against major global currencies on Wednesday afternoon, finding some support from an easing oil price, although market focus remains fixed on the US Federal Reserve’s interest-rate decision due on Wednesday night.

The market has fully priced in a 25 basis-points interest-rate hike from the Fed, although the tone of the message and the bank’s forward guidance will be closely scrutinised.

“With the US economy galloping along quite nicely, it is difficult to envision a dovish lean,” Oanda analyst Stephen Innes said.

Few local factors were giving the market direction, with the next major data release this week being that of producer inflation, due on Thursday. Inflation is expected to have moderated in August from July, with analysts of the opinion that the fuel price reprieve in the former was a factor.

Some support for the rand on Wednesday came from an easing oil price, after US inventory data surprised to the upside. An official US Energy Information Agency report due at 4.30pm local time was being watched by the market, with oil easing slightly from the four-year high it reached on Tuesday.

At 3pm the rand was at R14.3092 to the dollar from R14.3506, at R16.7983 to the euro from R16.8856 and at R18.8367 to the pound from R18.916. The euro was at $1.174 from $1.1766.

At the same time the benchmark R186 government 10-year note was bid at 9.1% from 9.145%.

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Source: businesslive.co.za