Rand weaker in cautious early trade

South Africa’s rand weakened early on Tuesday, giving back the previous session’s gains as some investors took profits ahead of key data releases later in the week.

At 07:00 GMT the rand was trading at 13.2250 to the dollar, 0.21% weaker than its close of 13.2125 overnight in New York as a breach of the 13.25 technical resistance mark triggered some technical selling.

The rand rallied to a new four-week best on Monday on the back of the uncertain dollar trajectory, but retreated early on with investors awaiting the next catalyst.

On Tuesday investors will look for signs of additional interest rate hikes from the Federal Reserve when Chairman Jerome Powell testifies before congress.

“They might struggle to continue raising rates at the pace that they were. This will put the dollar on the back foot again and makes emerging markets look more attractive as we have got the higher yield,” said Rand Merchant Bank forex trader, Jan Sluis-Cremer.

South Africa’s June consumer inflation data and interest rates decisions are due on Wednesday and Thursday this week. Rates are expected to remain unchanged at 6.5%.

The yield on the benchmark government bond due in 2026 fell 0.5 basis points to 8.715%.

Stocks opened flat, with the Johannesburg Stock Exchange Top 40 futures index down 0.1%.