JOHANNESBURG: The rand weakened against the dollar and government bonds nudged lower in early trade on Wednesday as continued concern about the European debt crisis prompted investors to shy away from riskier assets.
Trade data expected at 1200 GMT is not seen moving the market as the number tends to be volatile, often swinging from deficit to surplus, and traders said they are more likely to take positions on global developments.
The rand was 0.54 percent weaker at 8.3875 to the dollar by 0650 GMT. It closed at 8.3495 on Tuesday.
The rand looks to be pulling back from a 2-1/2 year low of 8.61 hit last week.
"The weekly divergence signal and monthly overbought condition in dollar/rand keeps us looking for a downward leg within a wide range of 7.50 and 8.70. The pullback over the past few days is helping our short-term (dollar) bearish case," said Judy Padayachee, technical strategist at Absa Capital.
Traders see resistance to further rand gains at around 8.25/6, which is the 38.2 percent Fibonacci retracement level from last week's low of 8.61.
Yields on benchmark four-year bonds added four basis points to 7.0 percent, while the 15-year climbed 2.5 basis points to 8.685 percent.
The R186 received good demand at auction on Tuesday but government is paying slightly more to borrow for fifteen years than it did three weeks ago when it sold the same issue.
Finance Minister Pravin Gordhan is speaking at 1100 GMT on the preliminary outcome of the 2011 tax season ended last week.
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