Rand slightly weaker ahead of trade data

The South African rand retreated early on Friday, giving back some of the previous day’s gains ahead of a data-packed session as sentiment toward emerging markets assets continued to lean toward negative outcomes.

At 0630 GMT the rand was 0.1% weaker at 15.34 per dollar, having touched a session-best 15.27 on Thursday with demand spurred by some month-end portfolio shuffling, as traders positioned for a likely re-test of the 15.50 level.

Local and global factors are against the rand. Trade and budget balance data releases in the session are unlikely to ease concerns about the country’s fiscal deterioration, and risks of contagion from Argentina’s financial crisis are bolstering a bearish investor outlook in the near-term.

Standard & Poors on Thursday slashed Argentina’s long-term credit rating another three notches into the deepest area of junk debt, following the government’s Wednesday announcement that it wants to “re-profile” some $100 billion in debt.

The ongoing trade stalemate between China and the United States has also soured EM sentiment.

Investors will scan local trade figures for July due at 1200 GMT for the impact of the Sino-US trade war. Monthly budget balance figures are also due at 1200 GMT.

“With the rand still teetering not far off of its highest levels in almost a year, weak data could keep the ZAR on the defensive,” traders at ETM Analytics said in a note.

Bonds were flat, with the yield on the benchmark 10-year government issue steady at 8.195%.