The rand lost ground from earlier levels against the greenback on Thursday afternoon, and over the medium term the local currency is expected to weaken further, according to a local trader.

At 3.45pm the rand was bid at 8.1461 to the dollar from its Wednesday night close of 8.1995. It was bid at 11.3755 to the euro from a previous 11.3592 and at 13.2033 against sterling from 13.1565.

The euro was bid at US$1.3959 from US$1.3873 on Wednesday.

A local trader said: "We saw lots of interest earlier for 8.07 to the dollar, and a long dollar at 8.17.

"We saw resistance topside at 8.25 and the medium trend is that we will still head upwards. The rand is still weakening overall," the trader said.

Dow Jones Newswires reports that the dollar and the yen slipped on Thursday morning as risk aversion eased overnight and other major currencies recovered some of Wednesday's losses.

The pound rose after the Bank of England voted to keep its policy rate unchanged and made no change to its asset purchase facility.

Currency markets were little changed on Thursday morning from pre-data levels after the latest US jobless claims report, which showed claims for state unemployment benefits unexpectedly tumbled last week to their lowest level since the beginning of the year.

Overnight in Europe, risk aversion waned and stock prices recovered, knocking the dollar and yen lower as the euro also regained some ground.

Even so, observers doubt the mild increase in risk appetite is sustainable, as the second-quarter earnings season, just now under way, could damp any positive sentiment if corporate profits disappoint. As the economic data calendar has been relatively light, investors have been looking elsewhere for direction.

Still, Alcoa Inc's earnings, one of the first US companies to report, didn't give the market much direction overnight, even though the aluminium giant beat Wall Street's beaten-down expectations.

The recent slide in commodity prices, such as crude oil, has also taken a toll on sentiment, as it reflects the uncertain outlook on the global economy. On Thursday morning, crude prices were up a bit, trading near US$61 a barrel, after losing ground fairly consistently in recent weeks.

R186 remains under pressure

South Africa's long-term R186 bond remained under pressure relative to the rest of the yield curve by the late afternoon on Thursday. The R186 is one of the source bonds in the auction next week and supply concerns appear to be causing polarisation of yields.

By 4.03pm the short-term government R153 bond was bid at 7.310 percent from a previous 7.355 percent. The medium-term R157 was at 8.640 percent from 8.685 percent, while the long-term R186 was bid at 9.180 percent from 9.190 percent before.

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