The rand firmed in the morning session on Monday tracking a stronger euro, while the local currency was stable on the crosses.

At 9am the rand was bid at 7.3827 to the dollar from 7.4237 at its previous close. It was bid at 11.0525 to the euro from its previous close of 11.0870 and was at 12.3505 against sterling from 12.4158.

The euro was bid at US$1.4969 from US$1.4920 overnight.

A local trader said: "The euro bounced and while there are probably a myriad of other things, the euro is probably the biggest factor this morning.

The rand is stable on the crosses and we will watch for dollar reaction.

"The range for the meantime is 7.35-7.45 against the dollar," he said.

RMB analysts John Cairns and Nema Ramkhelawan said in a morning report that global conditions were again aligning to allow US dollar/rand to test new lows.

"Equity markets are surging and gold made fresh highs this morning. Most importantly perhaps, Chinese officials have backed off last week's suggestions of fresh yuan appreciation - putting fresh pressure on the US dollar - just as President Obama arrives in the country.

"Despite all this, US dollar/rand still doesn't seem to have the impetus to break lower. Downside moves seem to fade each time we get down to below the 7.40s. A break is still possible but the key remains euro/US dollar managing to move through 1.5000/0064 - which is probably only possible if US data is very weak this week," the analysts said.

RMB pointed to monetary policy as being the focus locally. "The news that the ANC alliance is looking to review the SARB's role is unlikely to have an impact. Moving away from inflation targeting would be rand negative in the short term, if that decision was ever taken, while increasing rand volatility in the medium term, but for now it remains talk rather than action. A rate move at this week's MPC meeting is extremely unlikely, but the markets will be looking for hints of the new governor's stance and, from our perspective, what she thinks about the level of the rand," Cairns and Ramkhelawan concluded.

Dow Jones Newswires reports that the euro gained more ground against the dollar in Asia on Monday as signs of strong demand for commodities including gold added to hopes that the world's economy is recovering, prompting traders to buy high-risk currencies.

The euro climbed to an intraday high of US$1.4973 on EBS, about half a US cent higher compared with late Friday in New York. Its appreciation comes as spot gold rose to a fresh record of US$1127 a troy ounce during Asian hours, prompting speculators to unwind bets against currencies that are considered riskier than the US unit but pay the buyers more interest, such as the Australian dollar and sterling as well as the euro.

"Gains in gold prices lifted demand for currencies of commodities-exporting nations like the Aussie against the US dollar," said Osao Iizuka, chief foreign-exchange trader at the Sumitomo Trust & Banking Co. "Then the selling of the US dollar spread across other currencies, causing the euro to gain ground against it."

Until the US Thanksgiving holiday on November 26, around which time the volume of global currency trades often starts shrinking as US players go on vacation, the euro could rise to US$1.5300 amid a continuing broad downtrend in the greenback, Iizuka said. A fall below US$1.4700 is unlikely over that period, he added.

Bonds cheaper, but buyers lurk

Bonds were four basis points cheaper in early trade on Monday, but a dealer noted that investors were ready and waiting to buy into weakness.

By 9.04am the short-term government R154 bond was bid at 7.285 percent from a previous close of 7.180 percent. The medium-term R157 was at 8.440 percent from 8.400 percent, while the long-term R186 was at 9.030 percent from 9.010 percent before.