Rand gains on bets of Fed rate cut after muted US jobs data

The rand firmed in early trade on Wednesday after subdued US labour data boosted bets that the Federal Reserve was done hiking interest ratesand might start easing its monetary policy early next year.

At 0724 GMT, the rand traded at R18.93 against the dollar.

The dollar was little changed against a basket of global currencies.

Jobs data out of the US was below market estimates on Tuesday, “raising the prospect of a Fed rate cut in March next year,” said Andre Cilliers, currency strategist at TreasuryONE.

Like other risk-sensitive currencies, the rand often takes cues from global drivers like US monetary policy in the absence of local data points.

The rand breached R19.00 on Tuesday after the country’s third-quarter gross domestic product data showed a contraction slightly more than expected.

“The local currency will remain susceptible to any stronger moves in the Dollar and will likely trade on the back foot in the short term,” Cilliers added.

On the Johannesburg Stock Exchange, the blue-chip Top 40 index was around 0.5% up in early trade.

South Africa’s benchmark 2030 government bond was flat in early deals at 10.010%.