Factory data help rand climb

Business Day - - FRONT PAGE - Maarten Mit­tner Mar­kets Writer mit­tnerm@busi­nesslive.co.za

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%.

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