Rand steady as traders eye Fed, stocks down
The rand steadied against the dollar on Tuesday, struggling for momentum as investors awaited clues on US monetary policy from the Federal Reserve officials and domestic data. Stocks closed lower.
At 1500 GMT the rand was trading at R14.17 per dollar, after closing at R14.19 on Monday.
Trading was largely muted ahead of US Federal Reserve Chairman Jerome Powell’s testimony to the Congress and release of minutes on Wednesday from the US central bank’s last policy meeting.
“Jerome Powell’s biannual testimonies, FOMC meeting minutes, US-China trade developments and global sentiment will certainly dictate where the rand concludes this week,” Lukman Otunuga, research analyst at FXTM, said in a note.
“On Thursday, there will be a strong focus on South Africa’s manufacturing production figures which will provide further insight into the health of Africa’s most industrialised economy. Anything below market forecast will most likely be negative for the rand.”
Emerging markets have enjoyed capital inflows this year on signs major central banks will embrace a looser monetary policy as a result of trade disputes and growth concerns.
However, strong US jobs data on Friday all but ended expectations of a bold interest rate cut from the Fed at its meeting this month, leaving investors in search of hints on where rates are headed.
On the bourse, the Top 40 index fell 1.43% while the broader all-share was down 1.37%.
In fixed income, the yield on the benchmark 2026 government issue fell 1.5 basis points to 8.105%.