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Johannesburg - The rand was sharply firmer by
late Tuesday morning following the slightly firmer euro in the wake of
the Spanish bond auction results and better than expected German ZEW
index. A strong surge in local bonds was also aiding the trend.
At 11:45 local time the rand was bid at R7.8359 to the dollar from its previous close of R7.9368, after earlier trading near R7.96. It was bid at R10.2995 to the euro from R10.4184 before, and at R12.4934 against sterling from R12.6110 previously.
The euro was bid at $1.3151 from its previous close of $1.3134 after sinking to a two-month low of $1.2993 on Monday.
A local currency trader said that the rand had broken a key technical level at R7.86/dlr on the downside following the firmer euro after the ZEW index was released.
"That opens up some quite big move on the downside," he said. He added that the next key level would be around R7.7850, and after that there was not a lot left towards R7.63-65.
He added that local bonds were extremely well bid after the weekly bond auction and the Spanish auction. Bond traders noted strong foreign buying this morning, which was also boosting the currency. The benchmark R157 bond was last yielding 6.500% - 24.5 basis points stronger than its previous close.
Dow Jones Newswires reported German economic expectations increased slightly in April, despite expectations for a minor fall, as the German economy is expected to improve in the next six months amid lurking risks such as higher oil prices and the euro-zone's persisting sovereign debt crisis, the Center for European Economic Research, or ZEW, said Tuesday.
The economic expectations index rose to 23.4 in April from March's unrevised 22.3. Experts in a poll by Dow Jones Newswires had expected a fall to 20.0 for April.
The widely watched ZEW index moved sideways in April as expectations stabilized, ZEW said, after the index improved sharply in recent months. After declining for nine months on the deepening of Europe's sovereign debt crisis, the index turned positive in February.
The ZEW index rose slightly in April for the fifth consecutive month and remained in positive territory for the third month in a row after declining for nine months on the deepening of Europe's sovereign debt crisis.
In addition, the newswire reported that European stocks pushed higher Tuesday after Spain sold more paper than originally planned at its latest bill auction, prompting the yield on 10-year Spanish bonds to ease from the psychologically important 6% mark, lifting the euro currency and banking stocks in particular.
The better-than-expected auction saw Spain selling EUR3.178 billion T-Bills versus the €2bn-€3bn planned. Traders said the market will like this but Thursday's Spanish bond auction is more important. Investor sentiment has been largely cautious ahead of auctions by Spain this week, reflecting how poorly Spanish sovereign markets have performed recently and the sluggish demand at the Spanish auctions earlier in the month.
Spanish and Italian bond yields eased. After a sharp selloff in recent days, Spanish 10-year yields fell by six basis points to 5.97%, while the Italian 10-year yield was down three basis points at 5.54%, according to Tradeweb.
At 11:45 local time the rand was bid at R7.8359 to the dollar from its previous close of R7.9368, after earlier trading near R7.96. It was bid at R10.2995 to the euro from R10.4184 before, and at R12.4934 against sterling from R12.6110 previously.
The euro was bid at $1.3151 from its previous close of $1.3134 after sinking to a two-month low of $1.2993 on Monday.
A local currency trader said that the rand had broken a key technical level at R7.86/dlr on the downside following the firmer euro after the ZEW index was released.
"That opens up some quite big move on the downside," he said. He added that the next key level would be around R7.7850, and after that there was not a lot left towards R7.63-65.
He added that local bonds were extremely well bid after the weekly bond auction and the Spanish auction. Bond traders noted strong foreign buying this morning, which was also boosting the currency. The benchmark R157 bond was last yielding 6.500% - 24.5 basis points stronger than its previous close.
Dow Jones Newswires reported German economic expectations increased slightly in April, despite expectations for a minor fall, as the German economy is expected to improve in the next six months amid lurking risks such as higher oil prices and the euro-zone's persisting sovereign debt crisis, the Center for European Economic Research, or ZEW, said Tuesday.
The economic expectations index rose to 23.4 in April from March's unrevised 22.3. Experts in a poll by Dow Jones Newswires had expected a fall to 20.0 for April.
The widely watched ZEW index moved sideways in April as expectations stabilized, ZEW said, after the index improved sharply in recent months. After declining for nine months on the deepening of Europe's sovereign debt crisis, the index turned positive in February.
The ZEW index rose slightly in April for the fifth consecutive month and remained in positive territory for the third month in a row after declining for nine months on the deepening of Europe's sovereign debt crisis.
In addition, the newswire reported that European stocks pushed higher Tuesday after Spain sold more paper than originally planned at its latest bill auction, prompting the yield on 10-year Spanish bonds to ease from the psychologically important 6% mark, lifting the euro currency and banking stocks in particular.
The better-than-expected auction saw Spain selling EUR3.178 billion T-Bills versus the €2bn-€3bn planned. Traders said the market will like this but Thursday's Spanish bond auction is more important. Investor sentiment has been largely cautious ahead of auctions by Spain this week, reflecting how poorly Spanish sovereign markets have performed recently and the sluggish demand at the Spanish auctions earlier in the month.
Spanish and Italian bond yields eased. After a sharp selloff in recent days, Spanish 10-year yields fell by six basis points to 5.97%, while the Italian 10-year yield was down three basis points at 5.54%, according to Tradeweb.
