Factory data help rand climb

The rand gained further ground against the dollar on Thursday afternoon on upbeat local manufacturing data and subdued consumer inflation numbers for September out of the US.

The rand gained further ground against the dollar on Thursday afternoon on upbeat local manufacturing data and subdued consumer inflation numbers for September out of the US.

The rand’s gains are linked to improved economic prospects under new finance minister Tito Mboweni and a possible pause by the US Federal Reserve in hiking rates further after the IMF downgraded expected global GDP growth for 2018 and 2019.

US inflation rose 2.3% in September from 2.7% in August and 2.9% in July.

A second month of falling inflation will strengthen market concerns the Fed is set to continue with rate hikes in an environment of low inflation, which could ultimately affect growth negatively. Core inflation in the US, the Fed’s preferred measure of price pressures in the economy, was unchanged at 2.2%.

The euro gained on the dollar after the release of the data, hitting $1.1592 from $1.1517.

Locally, manufacturing production data came in slightly more positive than expected, rising 1.3% in August (from a predicted 1.2%) and 2.8% in the previous month.

At 2.53pm the rand was at R14.5578/$ from R14.7873/$, at R16.8674/€ from R17.031/€ and at R19.2704/£ from R19.4911/£.

FXTM analyst Hussein Sayed said the explosive volatility across global markets risks upgrading the threat of further volatility in the rand.

Local bond yields were higher despite US bond yields falling. The R186 was last bid at 9.28% from 9.22%.

The rise in US bond yields momentarily halted on Thursday as investors piled into safe havens to shelter from the turbulence in equity markets. The yield on the 10-year treasury note fell to 3.158% from 3.221% after US President Donald Trump said he was “not happy” with the Fed’s plans to raise rates further.

The 10-year was last seen at 3.1654% from 3.1673%.