The rand remained range bound in noon trade on Thursday, taking a breather after posting some gains over the past few days on the back of a general rise in global risk appetite.
The local unit was unmoved by producer price inflation data for March which was much better than expected.
At 12:00 local time the rand was bid at R7.7537 to the dollar from its previous close of R7.7444. It was bid at R10.2515 to the euro from R10.2350 before, and at R12.5592 against sterling from R12.5170 previously.
Gold was trading at US$1648.68 per ounce.
The euro was bid at US$1.3228 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.
Bonds firmer on short-covering
Bonds were a few basis points firmer in midday trade on Thursday which traders attributed mainly to some short-covering and residual buying by local investors.
The local gilts took little succour from better than expected producer price inflation data for March and also received little support from the rand which was range bound against major currencies, taking a breather after posting some gains over the past few days.
At 11:55, the benchmark R157 bond was at 6.475 percent from its previous close of 6.485 percent. The R207 was bid at 7.570 percent and offered at 7.545 percent from a previous close of 7.580 percent and the R186 was offered at 8.185 percent from its close of 8.200 percent.