Rand weakens ahead of U.S. jobs data, Moody’s review

JOHANNESBURG – Rand weakened in early trade on Friday as investors cautiously await a key U.S. jobs report that could have an impact on investor appetite for riskier but higher-yielding currencies.

At 0615 GMT, the rand traded at 14.2225 against the dollar, 0.25% weaker than its previous close.

“The markets are awaiting a number of significant data releases from the U.S. this afternoon. As a result, the price action ahead of these may be cautious,” analyst at Nedbank said in a note.

U.S. payrolls numbers are due at 1230 GMT and signs of strong job recovery are something of a double-edged sword for markets.

They could boost risk appetite and weigh on the safe haven dollar. But if they stoke inflation worries and lead to expectations of reduction in the Federal Reserve’s stimulus, it may boost U.S. bond yields and the dollar.

Investors also await a scheduled review of South Africa’s sovereign credit by Moody’s later in the day. The rating agency already assigns a “junk” status to the country, but with a negative outlook there is the potential for a further downgrade.

In fixed income, the yield on the benchmark government bond due in 2030 was up 1.5 basis points to 9.095%.

REUTERS