The rand was weaker in early trade on Thursday, in line with the weaker equity markets in Asia and the softer euro versus the US dollar.

At 8.59pm the rand was bid at 7.7954 to the dollar from 7.7152 at its previous close. It was bid at 10.4924 to the euro from its previous close of 10.4640 and was at 11.9306 against sterling from 11.9024.

The euro was bid at US$1.3472 from US$1.3541 previously.

A local currency trader said that weaker equity markets in Asia and the weak euro were setting the tone for the local currency.

RMB analysts said in their morning report that during Federal Reserve Chairman Ben Bernanke's semi-annual testimony to Congress, rhetoric regarding monetary tightening remained unchanged with Bernanke chanting the Fed's infamous mantra of "low rates of resource utilisation, subdued inflation trends and stable inflation expectations" warranting "exceptionally low levels of the federal funds rate for an extended period of time."

"If nothing else, the Fed Chairperson is consistent and continues to tame fierce expectations of interest rate hikes in 2010. The markets have responded accordingly, with interest rate futures ticking up slightly reflecting a reduction in the implied possibility of monetary tightening in the US before year-end," they wrote

The negative impact on the USD however was masked by EUR losses, as the possibility of a further downgrade of Greece's long-term credit to near junk status and protestations in the European country's capital against severe budget cuts, prompted safe-haven demand for USD.

"Emerging market assets and commodities, notably gold, suffered as a result and are likely to bear the brunt of further risk aversion due to Greece's fiscal woes. Nevertheless, the ZAR seems to have held its ground and remains wedged in a tight range. Momentum though appears to be in favour of USD/ZAR weakness with resistance around USD/ZAR7.85," they wrote

The outcome of US durable goods data, expected later this afternoon, may turn the tide and encourage risk-taking should the figure show continued acceleration.

Dow Jones Newswires reports the dollar and yen are gaining against the euro and sterling on Thursday, despite disappointing U.S. economic data and as Federal Reserve's Chairman Ben Bernanke's benign outlook for interest rates helped support riskier assets.

"The euro has tried to go up this week but keeps getting knocked back by deteriorating news surrounding Greece," said Greg Gibbs, currency strategist at RBS in Sydney. "It is far from clear that Greece or (the euro) will catch a break any time soon. The euro thus looks doomed to fall further as the year progresses, even if it can get a short-term reprieve."

On Wednesday, the euro made limited headway against the US currency overall, giving up nearly all its prior gains after Standard & Poor's warned it could downgrade Greece to a level close to junk within the next month.

Bonds firmer in very thin trade

Bonds were up to five basis points firmer in early trade, but traders said conditions were very thin. The main focus of attention this morning will be PPI numbers, due at 11.30am.

By 9am the short-term government R154 bond was bid at 7.070 percent and offered at 7.050 percent after closing at 7.110 percent on Wednesday and the medium-term R157 was at 8.210 percent from 8.360 percent at its previous close.

The long-term R186 was bid at 9.070 percent and offered at 9.040 percent from 9.100 percent previously.