Rand weak­ens as in­vestors await data

The Star Early Edition - - MARKETS -

THE RAND re­treated against the US dol­lar yes­ter­day, pulling back from three-week highs as in­vestors held off bets and took in prof­its ahead of do­mes­tic and over­seas gross do­mes­tic prod­uct (GDP) data due later in the week.

Lo­cal growth num­bers, due to­day are ex­pected to show a 1.5 per­cent ex­pan­sion in the third quar­ter, up from 0.6 per­cent in the pre­vi­ous quar­ter, but well be­low the gov­ern­ment’s tar­get of 4 per­cent an­nual growth.

At 5pm yes­ter­day, the rand was bid at R10.9911 to the dol­lar, 6.61c weaker than at the same time on Fri­day.

The rand’s re­cent rally to be­low the cru­cial R11 mark will be tested by off­shore events.

Mar­ket watch­ers ex­pect the re­lease of US GDP data to­day to show the num­ber one econ­omy re­mains on track for re­cov­ery, rais­ing the like­li­hood of in­ter­est rate hikes.

“The rand did re­act favourably to the Chi­nese rate cut but that is out of the way now,” David Gracey at In­vestec As­set Man­age­ment said.

“We must also be aware the SA Re­serve Bank last week said they’re fo­cus­ing on the US cy­cle,” he added, say­ing that the euro zone’s in­ten­si­fied stim­u­lus mea­sures would not fill the void left by the end of the US bond-buy­ing pro­gramme.

Gov­ern­ment bonds were also softer, with the yield on the bench­mark is­sue ma­tur­ing in 2026 ris­ing.

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