The rand tracked the US dollar during the morning session on Friday with an eye on US housing data out later, which is expected to provide further direction.

At 11.36am the rand was bid at 7.4297 to the dollar from 7.3822 at its previous close. It was bid at 11.1790 to the euro from its previous close of 11.1090 and was at 12.1953 against sterling from 12.2828.

The euro was bid at $1.5045 from $1.5025 overnight.

A local trader said: "We have seen a continued dollar/rand downtrend, with initial resistance at 7.45, and then 7.50, but for now it's all rather flat against the dollar within a five-cent range.

"Housing data out later in the US should provide us with some direction," he said.

However, RMB analysts John Cairns and Nema Ramkhelawan said in a morning report: "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."

Dow Jones Newswire reported that the dollar was mostly higher despite a rally in global equity markets, helped by a report that the Federal Reserve might be contemplating hiking rates early next year. Stronger equity markets, signalling improved appetite for risk-taking, are generally negative for the safe haven US currency.

However, a story in the Financial Times said the Federal Reserve may want to change the wording in its FOMC interest-rate decision statements, from suggesting that rates will stay where they are for an "extended period" to implying that there is a risk of rates going up in the first half of next year, given the weakness of the dollar and the rise in commodity prices.

The global strategy research team at Lloyds Banking Group plc said the story might well be behind the dollar's buoyancy.

"This report looks like a plant from the Fed to soften the market up and gauge its reaction. It may support the dollar and threatens risky assets," the team said.

Otherwise, general market sentiment has improved with equity markets rising after a strong increase in the US leading economic indicator on Thursday and further impressive third-quarter results.

Forecasts suggest existing home sales, which could show a 5.5 percent rise last month after a 2.7 percent fall in August, will provide another excuse for increasing risk.

The prospect of improved global demand was also evident in the price of crude oil, which continued to bounce around over $81 a barrel.

Bonds lifted

Bonds gained five basis points during the course of the morning on Friday as banks were forced to cover some of their short positions after funds had bought into weakness.

By 11.49am, 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 8.610 percent from 8.655 percent, while the long-term R186 was at 9.190 percent from 9.265 percent.

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