Firm rand-range bound in quiet trade

Johannesburg - The rand was trapped in a tight range in midday trade on Monday, quiet, with London markets closed for a bank holiday.

This week, the market will focus on global PMI data on Wednesday and Friday's US non-farm payrolls numbers being key, RMB analysts said.

At 11:44 local time local time the rand was bid at R7.2985 to the dollar from R7.2950 at the previous close. It was bid at R9.2817 to the euro from R9.3048 before and at R11.3437 against the sterling from R11.3239 at its previous close.

The euro was bid at $1.2719 from $1.2753 overnight.

A local dealer said: "We will continue to track the euro, but trade is very quiet with London closed for a bank holiday. We need to break R7.28 against the dollar to see any action."

RMB analysts noted in a morning report that US economic growth was now expected at 1.7% in third quarter 2010 from a previous forecast of 2.4%.

The actual second quarter 2010 growth number was not revised down as sharply as expected on Friday (it is now at 1.6%), meaning markets come into this week on a much more positive note.

The analysts said this is "certainly" rand positive, but with US dollar/rand suffering a 7 cent spike to 3.3850 on Friday on the back of a
surge in import orders, all the market has managed to do is to trade back to the R7.30 level this morning.

"Event risk remains exceptionally high, with global PMI data on Wednesday and Friday's US non-farm payrolls numbers being key. Some are calling this the make or break week for the economic recovery, particularly as the Northern Hemisphere holidays are coming to an end," RMB analysts said.

Whether this can break US dollar/rand from the R7.2000/2400 - R7.3850/4200 range is open to question.

The euro/US dollar remained the driver and price action is likely to be choppy and a little nervous. With London markets closed action could be a little slow.