The rand was weaker in early trade on Thursday as traders reacted to weaker than expected export data from Japan and manufacturing data from China.

“These poor data outcomes and growing trade disputes between China and Japan have spurred a fresh round of risk aversion‚ which in turn has caused investors to flock back to safe-haven currencies such as the US dollar and the Japanese yen‚” Absa Capital said in its morning report.

At 8.18am‚ the rand was bid at R8.3219 to the dollar from R8.2671 at Wednesday’s close. It was bid at R10.8048 to the euro from its previous close of R10.7804 and at R13.4689 against sterling from R13.4090 before.

Gold was trading at US$1762.69 per ounce.

The euro was bid at $1.2985 from $1.3048 at Wednesday’s close.

The rand has fallen victim to the risk-off trading mood because the focus is once again on offshore developments now that a resolution to the Lonmin wage dispute has been attained‚” it said.

“This afternoon's MPC meeting will provide rand participants with the authorities' latest take on the economy. If the SARB cuts rates by another 50bp‚ we could see the rand surrender some more ground in the afternoon trading session. Hence‚ we believe the risk lies in a weaker rand into and following today's MPC meeting‚” Absa Capital said.

Bonds a tad weaker on softer rand

The South African bond market was up to 3.5 basis points softer on Thursday morning‚ due largely to a weaker rand.

Absa Capital analysts noted that the rand started to weaken this morning due to weak export data out of Japan and disappointing manufacturing figures out of China.

“These poor data outcomes and growing trade disputes between China and Japan have spurred a fresh round of risk aversion‚ which in turn has caused investors to flock back to safe-haven currencies such as the USD and the JPY. The ZAR has fallen victim to the risk-off trading mood because the focus is once again on offshore developments now that a resolution to the Lonmin wage dispute has been attained‚” they said.

At 8.10 am‚ the benchmark R157 bond was trading at 5.420 percent from 5.385 percent at Wednesday’s close. The R207 was bid at 6.460 percent and offered at 6.440 percent from a close of 6.430 percent‚ and the R186 was trading at 7.510 percent from 7.460 percent at its previous close.