A volatile rand was within ranges in the morning session on Tuesday, but lacked any clear direction.

At 8.48am the rand was bid at 7.8786 to the dollar from 7.9680 at its previous close. It was bid at 11.6750 to the euro from its previous close of 11.7656 and was at 12.9197 against sterling from 13.0667.

The euro was bid at $1.4796 from $1.4773 overnight.

A local trader said: "The rand has been up and down this morning within a range of 7.82-8.02 against the dollar with no clear direction. Anything above eight could be significant, and for the moment we are volatile within ranges."

RMB analysts John Cairns and Nema Ramkhelawan said it is a little surprising that US dollar/rand was as high as 7.92 this morning given that Wall Street bounced overnight, that gold is testing up at new highs, and that all compatriot currencies were performing better.

"Euro/rand is even more surprising, pushing up to 11.80 at one stage yesterday, the highest since May of this year," the analysts said.

"Going on the data, in fact, you would have thought Monday would have been a great day for the rand. Purchasing managers indices show the manufacturing sector is rebounding globally, with the US index (the ISM) suggesting another quarter of 3.5 percent or even higher growth in 4Q. And even our own PMI bounced nicely, although still not to territory that signals an expansion in production," they said.

"The rand weakness then is looking a bit stretched. US dollar/rand traded as high as 8.00 in New York trade. This still offers resistance, but on a day with practically nothing on the events calendar and with global markets settling, we can probably expect to drift, with the bias a little lower. If this is merely a temporary lull or a change in the trend will probably only be determined by Friday's US employment data and, possibly, the central bank statements mid-week," Cairns and Ramkhelawan concluded.

Dow Jones Newswires reported the dollar dipped on Tuesday in Asia after the International Monetary Fund made a big gold sale to India, but the US currency rebounded as Australia's central bank signalled it may pause its monetary tightening next month.

The moves were mostly modest in thin trade as Japanese markets were closed for a national holiday.

The euro and gold gained at the dollar's expense as news that the IMF sold 200 metric tons of gold to the Reserve Bank of India stoked expectations that central banks, especially in Asia, will continue to shift away from their reliance on the US currency.

But the buck got a lift against the Australian dollar, as well as the euro, when the Reserve Bank of Australia - after raising rates by a quarter percentage point for a second month in a row, as expected - said the tightening "will work to increase the sustainability of growth in economic activity and keep inflation consistent with the target over the years ahead."

Bonds watch rand

Bonds were a slightly weaker in early trade on Tuesday ahead of the supply-heavy weekly auction. A close watch is also being kept on the unsteady rand.

By 08:48, the short-term government R154 bond was bid at 7.235 percent from a previous close of 7.150 percent. The medium-term R157 was at 8.490 percent from 8.470 percent, while the long-term R186 was bid at 9.095 percent from 9.060 percent.

I-Net Bridge

What is a rand freeze? What does it mean to 'freeze' a currency - and what are the consequences? Here's how it works.

Great or gloomy? Do you think Finance Minister Pravin Gordhan's first Budget speech was great or gloomy?

SA firms top world's best Three South African companies have made their way onto a list of the world's top 40 firms.