The rand was slightly weaker in early trade on Thursday‚ along with the euro‚ after the Federal Reserve's Open Market Committee opted to extend Operation Twist until the end of the year‚ rather than announcing further quantitative easing.
There is a slew of local data due today which is expected to offer direction to the markets‚ according to analysts.
Of most significance is the SARB Quarterly Bulletin which analysts said would gauge the sluggishness in the demand side of the economy.
At 08:47 the rand was bid at R8.2397 to the dollar from Wednesday’s close of R8.1984. It was bid at R10.4409 to the euro from its previous close of R10.4102 and at R12.9195 against sterling from R12.8877 before. The euro was bid at US$1.2669 from Wednesdays’s close of $1.2691.
Gold was trading at $1600.03 per ounce.
“We are fairly range bound. We had some reaction last night which saw us go to 8.15 but we are now back up to 8.23. There is a lot of data coming later today‚ we’ll see how that will move the markets‚” a local trader said.
Absa Capital analysts in their morning report said the rand is back up at R8.20 after Chinese PMI data fell to a 7-month low owing to faltering exports.
“This will no doubt continue to bring into question the health of the global macro environment and‚ along with today’s all important Spanish bond auction‚ could see a rather tentative environment for risk‚” Absa said.
The Bank said the SARB’s Quarterly Bulletin would be closely watched.
“Yesterday’s lower-than-expected moderation in domestic CPI spurred further speculation that the SARB MPC could ease policy rates in the coming months. Hence‚ a larger-than-expected moderation in household consumption spending and/or fixed investment in today’s QB could add further fuel to this view‚” the Bank said.
Dow Jones Newswires reported the dollar was somewhat higher against other key currencies on Thursday after the Federal Reserve's Open Market Committee offered a largely-as-expected statement on its easing measures‚ while the euro trended lower ahead of results from an audit of Spanish banks due later in the day.
The FOMC said after its meeting that it is extending the current bond-purchase program and said it stood ready to take additional steps‚ an announcement that met the lower end of market expectations.
That helped boost the dollar since it meant there would be less dollar liquidity coming into the market‚ which tends to push down the greenback's value.
The euro trended lower‚ meanwhile‚ after the flash figure for the China HSBC Purchasing Managers Index for June fell to 48.1 compared with 48.4 in May‚ falling for the eighth straight month. The lower reading will likely heighten expectations of a possible sharp slowdown in the world's second-largest economy.
The euro was also affected by concerns that the audit of Spanish banks could show that the recent bailout fund agreed for the nation won't be enough to save its troubled banks.
"Our bank's internal research shows Spanish banks have a huge amount of bad mortgage loans and real estate‚ so it's possible that the audit will negatively surprise the market‚" said a senior dealer at a major bank in Tokyo.