The rand was trading in very quiet territory at noon on Monday‚ weaker on the back of the euro‚ with investors waiting for fresh cues from the EU summit on Thursday and Friday.
"The euro is slowly weakening and the rand is following as the rand is euro-driven‚" said Tim Bryson‚ currency trader at Rand Merchant Bank.
This summit will be the 19th summit since the euro debt crisis started and Greece will request an easing of their bailout terms at the event.
At 11:40 the rand was bid at R8.4551 to the dollar from its previous close of R8.4113. It was bid at R10.5631 to the euro from its previous close of R10.5444 and at R13‚1448 against sterling from R13.1068 before.
The euro was bid at US$1.2490 from its previous close of $1.2541.
Standard Bank said in a note on Monday the rand’s rally down to the R8.20 mark last week was not likely to last.
"The risk-on mood‚ triggered by the positive outcome of the Greek elections‚ some encouraging statements out of the G20 meeting and expectations of QEIII quickly faded after the Fed opted to merely extend Operation Twist."
"The euro is weaker this morning ahead of what is likely to be this week’s highlight: the EU summit. Concern over the future of the eurozone remains high amidst the impasse over the possible introduction of common Eurobonds‚" the bank said.
Barclays Bank said in a note today that all eyes would be on US housing and consumer spending data‚ as any disappointment was likely to cause a pickup in global risk aversion.
"Because this typically translates into rand weakness‚ rand bulls are likely to remain quiet until markets receive more consistently positive global news flow and/or some concrete improvement on the EU debt front. We are hoping for more signals of a coordinated approach at this week’s EU summit‚ which could provide some respite for risky assets‚" the bank said.
Bonds a tad softer in muted trade
South African bonds were a touch softer in muted midday trade on Monday as they followed the weaker rand.
At noon‚ the benchmark R157 bond was trading at 6.055 percent from Friday’s close of 6.010 percent. The R207 was bid at 7.235 percent and offered at 7.205 percent from a previous close of 7.180 percent and the R186 was trading at 8.050 percent from its previous close of 7.990 percent.
The rand was bid at R8.4515 against the dollar from Friday’s close of R8.4113 and Thursday’s close of R8.3794.