The rand was slightly weaker in early trade on Tuesday in what a local trader said was the currency running out of momentum and still remaining dependent on the euro.

At 9.02am the rand was bid at 7.4260 to the dollar from 7.4100 at its previous close. It was bid at 11.1380 to the euro from its previous close of 11.1178 and was at 12.3908 against sterling from 12.4335.

The euro was bid at $1.4993 from $1.4999 overnight.

"We are slightly weaker this morning. The euro didn't set new highs. We are still very much dependent on the euro," the trader said.

"I think we are somewhat oversold towards 7.40. Emerging markets are slightly off the radar.

"If the euro sets new highs through 1.520, the rand can go to 7.30," he said.

"The rand is running out of momentum somewhat, but we are still dependent on the euro," he added.

RMB analysts John Cairns and Nema Ramkhelawan in their morning report said: "Was October just a blip in the risk rally? It might well have been ? risk- taking is back this month, with the Dow pushing up 2% overnight to a new 2009 high."

They said helping the rand furthermore was a gold price that remained above the $1100-an-ounce mark.

"But there is one overriding issue for USD/ZAR and that's the movements in the USD as reflected in EUR/USD. With the G20 over the weekend promising continued economic stimulus and failing to talk up the greenback, EUR/USD is back pushing at the 1.5000 level and threatening to break the 1.5024 (a level that repeatedly couldn't be broken) and 1.5060 (brief spikes to this level saw us drop back below 1.5024 each time) resistance levels that would open up moves to fresh post-crisis highs.

"It's now as simple as this; if EUR/USD can break higher then USD/ZAR will be able to push below 7.40 and move to test lows around 7.24/27. It does, however, appear that there will be good support on USD/ZAR ? implying we will probably need to see EUR/USD at 1.52/53 before we see the lows on USD/ZAR break," said Cairns and Ramkhelawan.

They noted that there's a raft of data out of the eurozone on Tuesday, with the main risk coming from the German ZEW investor confidence survey at 12:00.

"Locally, the manufacturing figures are released at 13:00. Various Fed members will also speak this evening ? hopefully giving us some direction on US interest rates.

"Local political news is mixed. The markets will be encouraged by the ANC's backing of Trevor Manuel to head the National Planning Commission. It has, however, been suggested that Eskom's management problems might restrict its ability to borrow offshore. Both issues will likely be ignored," the analysts said.

Dow Jones Newswires reported that the British pound plunged against the dollar almost 1.5 cents from $1.6755 to $1.6610 on Fitch's warning that the UK is most at risk among major economies of losing AAA status, traders said. Big sell-stops stand below $1.660, said a Singapore-based dealer.

Earlier, markets were little changed as liberal stimulus is set to continue in the G20 economies.

Reassurances that loose monetary and fiscal policy will continue are stemming concerns over last week's disappointing US monthly employment data.

"The (US) dollar is likely to remain under pressure due to interest rate differentials, momentum, and lack of official concern (about dollar weakness from the G20 meeting over the weekend)," said Brown Brothers Harriman in a report.

"Borrowing cheap and investing has become sort of the norm," said Jacob Oubina, currency strategist at Forex.com.

"More stimulus is positive for the equity markets, and that in turn helps to lift the euro-dollar and other risk trades," said Kathy Lien, chief strategist at Global Forex Trading in New York. "As long as the G20 members are not paring back the stimulus, higher-yielding currencies should continue to outperform the dollar."

Bonds better offered

Bonds ? notably at the longer end ? were better offered due to supply concerns going into the weekly auction. The slightly weaker rand was not offering support.

By 8.49am, the short-term government R154 bond was bid at 6.990 percent from a previous close of 6.915 percent. The medium-term R157 was at 8.255 percent from 8.240 percent, while the long-term R186 was at 8.890 percent from 8.860 percent before.