South African rand treads water before US jobs data as markets assess Fed rate path
- The rand traded at 15.9975 against the dollar , little changed from its previous close
JOHANNESBURG: The South African rand was muted in early trade on Friday as attention turned to highly awaited U.S. jobs data for clues on the Federal Reserve’s next interest rate decision.
At 0625 GMT the rand traded at 15.9975 against the dollar , little changed from its previous close.
The US nonfarm payrolls report is due at 1230 GMT and the unemployment rate is expected to hold steady at 4.1%.
The rand, like other emerging market currencies, tends to take direction from global factors, including US economic data and geopolitical developments.
South African rand muted ahead of business activity PMI
ETM Analytics said in a note that if employment growth comes in weaker than expected, it would support the argument for the Federal Reserve to keep interest rates unchanged, reduce expectations of a September rate hike, and likely help the South African rand strengthen against the dollar.
“A firm print, especially with wage pressures, would rebuild the case for tightening by year-end, lift the USD index and push the pair back towards 16.20 as emerging-market betas unwind,” said ETM Analytics.
South Africa’s benchmark 2035 government bond was slightly firmer in early deals, as the yield fell 1.5 basis points to 8.565%.