The rand was range bound in early trade on Thursday as it took a breather after its gains over the past few days supported by a general rise in global risk appetite.

At 08:30 local time the rand was bid at R7.7266 to the dollar from its previous close of R7.7444. It was bid at R10.2257 to the euro from R10.2350 before, and at R12.4955 against sterling from R12.5170 previously.

Gold was trading at US$1648.16 per ounce.

The euro was bid at US$1.3235 from its previous close of $1.3223.

RMB analysts said in their morning report that the rand had continued to strengthen on Wednesday as a general rise in global risk appetite supported the local unit.

Indicators of global risk appetite such as global equity markets, the VIX and EM sovereign spreads also improved. Growth-sensitive commodities, including oil and copper, also rebounded.

Markets also took heart from the Fed's statement last night. As expected, US policymakers decided to keep interest rates unchanged and maintained their guidance to keep it around zero until late 2014.

"What bolstered confidence was the upgrade in their forecast for US economic activity: they lifted their forecast range for this year by 2ppt (they now see growth between 2.2 percent and 2.9 percent) and they anticipate unemployment to fall slightly faster than previously expected. In addition to the upgrade in the outlook, the Fed chairman mentioned that he is prepared to provide additional stimulus if needed," the RMB analysts noted.

But after a few days of strength, they said, the rand is likely to take a breather.

"The positive overnight sentiment in Asia should provide some support this morning, while the release of jobs data (initial jobless claims) in the US will provide direction this afternoon as the local market eases into tomorrow's public holiday," they added.

Standard Bank Research noted that the Federal Open Market Committee (FOMC) meeting had come and gone relatively uneventfully. "Stocks and commodities have gained support, with the dollar at perhaps cheap levels to most majors now that Bernanke has confirmed that rates would remain low until late 2014.

"With the FOMC behind us, Europe remains the key risk to the outlook. FX markets remain contained within broad ranges as external factors continue to dominate the direction of the rand. Simmering tensions in the Eurozone are likely to come back to haunt the euro, which we see weakening in the medium term, dragging the rand down with it," the bank added.

Local focus, they said, would now be on the local PPI data today.

"We expect PPI to have slowed to 7.8 percent y/y in March, supported by a stronger rand and a moderation in food prices. Price pressures in recent months were driven primarily by higher commodity prices and the depreciation of the rand. However, the rand strengthened in March, averaging around 7.6 against the dollar. Commodity prices have also come down and, importantly, some soft commodities, including corn, have been on the decline.

"The main risk to the outlook for PPI is the volatile exchange rate. Should the rand weaken, we could see price pressures stemming from imported commodities. While the rand has enjoyed some gains recently, a sudden reversal in risk aversion could put pressure on the rand as well as on imported prices. Should prices push higher, this could fan food inflation, thereby crimping households' disposable income. Mining and quarrying, electricity and products of petroleum and coal, which collectively account for 30 percent of the total PPI basket, are expected to continue undermining PPI. A softer March PPI and a further moderating CPI print support our view that the Reserve Bank is likely to leave rates on hold this year," the bank said.

Bonds steady ahead of PPI

Bonds were steady in early trade on Thursday ahead of the release of key producer inflation data from Stats SA at 11:30.

PPI is expected to have registered 7.9 percent year on year (y/y) in March from 8.3 percent y/y in February, a survey by I-Net Bridge has found. Forecasts among 11 leading economists surveyed ranged from 6.5 percent y/y to 8.4 percent y/y.

Volumes are expected to be on the thin side today, with SA markets closed tomorrow for the Freedom Day public holiday.

A local bond trader said it was evident in early dealings on the bond market that many players have already left for the long weekend.

At 08:30, the benchmark R157 bond was at 6.470 percent from its previous close of 6.485 percent. The R207 was bid at 7.580 percent and offered at 7.550 percent from a previous close of 7.580 percent and the R186 was offered at 8.170 percent from its close of 8.200 percent.