JOHANNESBURG: South Africa's rand firmed early on Thursday, tracking fellow emerging market currencies as expectations the U.S. central bank would lower lending rates returned following a batch of gloomy data in the world's number one economy.
At 0650 GMT the rand was 0.36% firmer at 14.0100 per dollar, its strongest level since April 18.
The U.S. trade deficit jumped in May while the protracted trade war between Washington and Beijing drove activity in the services sector to a two-year low in June, data showed on Wednesday, adding to signs of a slowdown in the world's largest economy.
The greenback slipped as investors sought higher yielding assets.
Asian currencies rose overnight and other emerging units are expected to do the same as the session wears on, with a holiday in the United States, however, limiting volumes.
"Market trading activity has been exceptionally subdued over the most recent sessions, with the markets trading with little conviction and maximum caution, with U.S. NFP data scheduled for release on Friday," analysts at Nedbank said.
U.S. non-farm payrolls data due on Friday is set to give an even clear indication of the Federal Reserve's likelihood to cut rates, and in lieu of any major local data releases provides the main focus for investors.
"The market expects these data releases to provide the backdrop for the Fed's tone going forward," Nedbank said in a note.
Bonds were also firmer, with the yield on the benchmark paper due in 2026 down 3.5 basis points to 8.075%.
Comments
Comments are closed.