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Johannesburg - The rand rallied to a five-week high against the dollar on Thursday, breaking through resistance levels as manufacturing data signalled improved economic growth.
Rising risk appetite globally, underpinned by solid Spanish and Italian bond auctions, also supported the rand.
The unit gained 0.4% after the better-than-expected manufacturing data, raising hopes that economic growth in the last quarter of 2011 might have improved from 1.4% quarter-on-quarter growth in the third quarter.
In early evening trade, the rand was at R8.06/$, coming back from the session’s high of R8.01/$, its strongest level since December 8, after closing at R8.0880/$ on Wednesday in New York.
“Some positive events for risk out today; we had very good auctions in the periphery of Europe which were well subscribed, with the market taking that as very positive for risk, and the rand rallied quiet hard on the back of that,” said Duncan Howes, a currency trader at Absa Capital.
The risk-prone rand saw a slight sell-off due to a ratings warning for France, but investors quickly recovered their appetite for risk seeing the warning as “nothing new”.
“All in all we had a more positive day for risk,” Howes said. He sees the rand’s next resistance level at around 7.95, which is its previous high and its 300-day moving average.
Government bonds benefited from the positive sentiment with yields ending 7.5 basis points lower on the 2015 bond and 5.5 basis points down on the 2026 issue.
Power utility Eskom announced it would sell up to R250m spread between its 2018 and 2026 bonds next Wednesday in its first auction of the year.
Rising risk appetite globally, underpinned by solid Spanish and Italian bond auctions, also supported the rand.
The unit gained 0.4% after the better-than-expected manufacturing data, raising hopes that economic growth in the last quarter of 2011 might have improved from 1.4% quarter-on-quarter growth in the third quarter.
In early evening trade, the rand was at R8.06/$, coming back from the session’s high of R8.01/$, its strongest level since December 8, after closing at R8.0880/$ on Wednesday in New York.
“Some positive events for risk out today; we had very good auctions in the periphery of Europe which were well subscribed, with the market taking that as very positive for risk, and the rand rallied quiet hard on the back of that,” said Duncan Howes, a currency trader at Absa Capital.
The risk-prone rand saw a slight sell-off due to a ratings warning for France, but investors quickly recovered their appetite for risk seeing the warning as “nothing new”.
“All in all we had a more positive day for risk,” Howes said. He sees the rand’s next resistance level at around 7.95, which is its previous high and its 300-day moving average.
Government bonds benefited from the positive sentiment with yields ending 7.5 basis points lower on the 2015 bond and 5.5 basis points down on the 2026 issue.
Power utility Eskom announced it would sell up to R250m spread between its 2018 and 2026 bonds next Wednesday in its first auction of the year.
