Rand, bonds firm after weeks of selling

Johannesburg - The rand pulled back from five-week lows against the dollar on Monday as softer-than-expected US jobs numbers last week still buoyed risky assets globally, while local data later in the week should provide direction.

By 15:05 GMT, the rand was trading at 11.2330/$, around 0.2%t firmer than its New York close on Friday but off a session peak of 11.1650/$.

"Dollar/rand pullback is in full swing, with the pair looking set to test the 11.15 handle over the near-term," Tradition Analytics said in a market note.

"Manufacturing, mining and retail sales data this week will provide a glimpse into local growth dynamics and are the key data risk events to watch out for."

Statistics South Africa is releasing manufacturing numbers on Tuesday, retail sales figures on Wednesday and mining data on Thursday. The output data will be keenly watched as the manufacturing and mining sectors entered recession in the second quarter of the year.

Retail sales figures are key as consumer spending has previously helped to prop up the economy, but with households battling high interest rates and a weak rand, spending is likely to be lacklustre.

Market players said even though the rand was starting the week strong, the underlying trend was for weakness that will mainly be driven by poor domestic fundamentals.

The rand is still dealing with the hangover of a ratings downgrade from Moody's last week.

Fitch and S&P are due to give ratings reviews for South Africa in December and investors are worried there could be more bad news on the horizon as the economy struggles to grow after months of strikes knocked the output sector.

Ratings agency's have also long been sounding warnings about South Africa debt and with the next reviews due next month, the government has little chance to change views about debt trends.

Yields on the government benchmark 2026 bond fell 10 basis points to 7.955%.

South Africa's securities exchange reported offshore investors sold a net R2.6bn ($231m) in local shares and over R600m worth of bonds last week.