A range-bound rand tracked the euro/dollar play in the morning session on Friday, as the European currency traded above 1.50 against the greenback.

At 8.55am the rand was bid at 7.4321 to the dollar from 7.3822 at its previous close. It was bid at 11.1396 to the euro from its previous close of 11.1090 and was at 12.3712 against sterling from 12.2828.

The euro was bid at $1.5001 from $1.5025 overnight.

A local trader said: "It is looking rangy today after yesterday's excitement. The euro hit 1.50 against the dollar so we are keeping an eye on that.

"We need to break 7.52 to against the dollar to go higher, with the bottom end of the range at 7.40."

RMB analysts John Cairns and Nema Ramkhelawan said that even though US dollar/rand was poised at 7.40, "one would expect the local unit to be closer to 7.25 given that euro/US dollar is flourishing at 1.50, the Dow is perched above the elusive 10 000 level, and gold is thriving at $1060 an ounce.

"The rand has the potential to strengthen especially since the US dollar index has reassumed its downward trend after a brief pullback from 14-month lows against a basket of currencies. The extent of rand gains remains to be seen as the unit tends to stall once it breaks 7.30, they said.

"On the data front, corporate earnings results largely overshadowed figures released yesterday. The market shrugged off the dreary US housing and unemployment figures and instead focused on quarterly earnings, which have generally exceeded expectations. Although buoyant corporate earnings suggest that the US economy resumed growth in 3Q09, persistently high unemployment, characterised by a rise in the number of US workers filing new claims for jobless aid, remains a key constraint," the analysts said.

"Event risk is spread across Europe and the US today, though it seems unlikely that any data will have a meaningful effect on the markets or risk appetite given the dominance of corporate earnings results," Cairns and Ramkhelawan said.

Dow Jones Newswire reported that the euro rose to a more-than two-month high of Y137.83 in Asia on Friday as stronger regional share markets prompted hedge funds and other short-term players to buy the risk-sensitive unit.

If equities in Europe and the US also rally later, the common currency could end the week even higher, possibly reaching a four-month high of Y139.00, dealers said.

Bonds stay put

Bonds were virtually unchanged from overnight levels on Friday morning as Thursday's negative news around the rand and government spending continued to keep yields at weaker levels on the week.

By 8.55am, the short-term government R154 bond was bid at 7.350 percent from a previous close of 7.430 percent. The medium-term R157 was at 8.660 percent from 8.655 percent, while the long-term R186 was bid at 9.260 percent from 9.265 percent.