The rand was relatively stronger on Monday morning‚ riding positive global market sentiment.
Markets appear to have viewed the better than expected US nonfarm payrolls report on Friday in a favourable light.
The world’s largest economy created many more jobs (223 000) in May than expected‚ pushing unemployment to an 18-year low. Wages also grew‚ suggesting a tightening labour market.
But the US jobs report did not seem to translate into sizable gains for the dollar‚ although the yield on benchmark US treasuries ticked higher.
Nedbank Corporate and Investment Banking analysts Mehul Daya and Walter de Wet viewed the current relative strength in the rand as temporary‚ sticking to their year-end target of R13.10/$.
“We still maintain the view that the first-order driver for rand and EMs [emerging markets] forex will be the US dollar‚ despite the stable inflation outlook in the SA and other EMs.”
Markets also chose to ignore the fear of a trade war‚ which has cast a shadow on global growth.
Last week‚ US president Donald Trump’s administration imposed steel and aluminium tariffs on the EU‚ Canada and Mexico‚ setting off threats of retaliation from the affected countries.
Recently Trump sent out mixed signals regarding the US’s position on trade with China‚ after the world’s largest economies worked on a framework to address trade imbalances.
Local bonds were flat in early trade‚ but fared better than last week. The yield on the benchmark R186 bond was at 8.61%‚ compared with highs of 8.70% last week.
At 10:29am‚ the rand was at R12.5790 to the dollar from R12.6647‚ R14.7235 to the euro
by Andries Mahlangu – BusinessLIVE