A firm rand was a fraction stronger in the morning session on Wednesday, as it sat in a range tracking the greenback ahead of CPI and home stats out later in the US.

At 8.57am the rand was bid at 7.4342 to the dollar from 7.4810 at its previous close. It was bid at 11.0735 to the euro from its previous close of 11.1168 and was at 12.5030 against sterling from 12.5678.

The euro was bid at $1.4891 from $1.4862 overnight.

A local trader said: "We are range bound this morning, tracking the dollar again ahead of October consumer price index and housing stats out later."

RMB analysts John Cairns and Nema Ramkhelawan in a morning report noted that ECB President Trichet reiterated the need for a strong US dollar and, although he has expressed this view before, stressed the importance of a robust currency not only for the US but the "international community" as a whole.

"Locally the SARB is faced with similar currency concerns. In her maiden MPC address Governor Marcus acknowledged the adverse effects of a stronger rand on certain sectors in the economy, but highlighted its positive effect on inflation," Cairns and Ramkhelawan said.

"The governor stamped her authority on proceedings by dismissing claims that her appointment was politically motivated and emphasised that the central bank will not target the exchange rate, as the rand's appreciation is a product of exogenous factors," RMB said.

"Although the rand danced about during the governor's statement yesterday, it failed to strengthen beyond 7.35 largely due to euro/US dollar's inability to break 1.50. While the budding gold price continues to provide support to the rand, minimal increases in global equities and waning investor appetite for risk might strangle further rand gains," the analysts said.

"Developments in euro/US dollar remain key as the rand remains bound to movements in the euro. Event risk is limited to US CPI and housing data today, which is expected to print in line with consensus," Cairns and Ramkhelawan concluded.

Dow Jones Newswires reported that the euro on Wednesday gave up most of its early gains against the dollar and the yen as weak Japanese shares prompted speculators to sell it for the safe-haven US and Japanese currencies.

Traders said the market will be watching the Bank of England's November conference minutes due at 09:30 GMT, and the US October consumer price index and housing starts, both slated for a 13:30 GMT release. If these paint a more bullish picture of the global economy, that could lift the European currency, traders said.

Meanwhile, the US unit declined slightly against the yen to Y89.17, from Y89.30 in New York overnight, as traders bought the yen with currencies such as the Australian dollar and the euro, which involves selling of the US dollar in the process.

Bonds soft in early trade

Bonds were a touch softer in early trade on Wednesday ahead of retail trade sales data later in the morning.

By 9.50am, the short-term government R154 bond was bid at 7.280 percent from a previous close of 7.205 percent. The medium-term R157 was at 8.390 percent from 8.365 percent at its previous close, while the long-term R186 was at 9.065 percent from 9.035 percent before.