The rand remained traded in ranges during Wednesday afternoon as it tracked the euro, while the release of the SA Purchasing Managers' Index (PMI) had little effect on the local currency.
The PMI, which is a diffusion index measuring activity in the manufacturing sector, with 50 the breakeven level, dropped to 53.7 in April from 55.1 in March, 57.9 in February and 53.2 in January.
At 15:34 local time the rand was bid at R7.7352 to the dollar from its previous close of R7.7283. It was bid at R10.1569 to the euro from R10.2270 before, and at R12.4971 against sterling from R12.5305 previously.
The euro was bid at US$1.3137 from its previous close of $1.3234.
"It had been a relatively quiet day, the rand has been following the euro and was mostly range-bound. The PMI came out lower than expected but had little impact on the local currency," said a local trader.
RMB said in its morning commentary that it had been a positive start to the week, with good PMI figures from the US and China, a drop back in Spanish and Italian bond yields and the Dow hitting a fresh four-year high.
"The US ISM (equivalent to our PMI) manufacturing index's surge to 54.8 in April from 53.4 in March eased fears that the world's largest economy could be set for a 2011-style slump, suggesting that after a March and April siesta, the economy is accelerating again. We need a lot more data to confirm the outlook but in the unlikely event of a good non-farm payroll employment report on Friday, expect equities and the rand to rally hard.
"The new buzzword in town is growth. A wash of commentary suggests that austerity measures in Europe are self-defeating in that they are leading to economic contraction, which makes meeting the budget harder and therefore a possible spiral into oblivion. According to the new thinking, we need less focus on austerity and more on growth. Newly elected officials across Europe love the idea, the Germans hate it. The last word will go to the bond markets. So far the reaction has been surprisingly good: despite the two-notch downgrade on Friday and weak GDP data on Monday, Spanish 10-year yields have backed off aggressively from the 6 percent level. For all the negative talk, Spain is not collapsing.
"The data diary will heat up today, with PMI figures from those countries that were on holiday yesterday, eurozone unemployment figures and US factory orders and ADP employment data. The calendar will become even busier as the week progresses, with the ECB meeting tomorrow, payrolls data on Friday, and the Greek and French elections on Sunday," the bank noted.
Dow Jones reported that the euro suffered heavy losses against other major currencies Wednesday after economic indicators underpinned fears of a deepening slump in euro-zone growth, contrasting unfavourably with the previous day's robust US manufacturing data.
A raft of purchasing managers' indexes from the manufacturing sector helped paint a deeply gloomy picture for the euro zone.
The euro slumped to less than $1.3180 from around $1.3225, before extending losses as poor jobs data added to the gloom. The currency broke through the $1.3150 level, breaking through an options-related barrier before hitting the day's low at $1.3134.
The weak eurozone data was contrasted with the release on Tuesday of a stronger-than-expected Institute of Supply Management survey for April, a widely tracked measure of US manufacturing output.
The ECB meets tomorrow to decide on interest rates and while the consensus market view remains for an unchanged reading, all eyes will be on ECB president Mario Draghi's subsequent press conference at 1230 GMT.
Bonds remain firm on auction
South African bonds were firmer in late afternoon trade on Wednesday, which a trader attributed to a well-subscribed auction earlier in the day.
At its weekly auction, the National Treasury received bids totalling R2.81 billion for R800 million worth of R208 bonds at a clearing yield of 7.630 percent, R1.70 billion for R800 million worth of R186 bonds at a clearing yield of 8.200 percent and bids totalling R1.49 billion for R500 million worth of R214 bonds at a clearing yield of 8.790 percent.
At 15:50, the benchmark R157 bond was at 6.385 percent from its previous close of 6.460 percent. The R207 was trading at 7.480 percent from a previous close of 7.555 percent and the R186 was trading at 8.110 percent from its close of 8.165 percent.