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Johannesburg - The rand steadied against the dollar on
Wednesday, but looked ready to fall through the R8.20 barrier and out of last
week’s range as investors waited for retail sales data that could point to
slowing economic growth in Africa’s largest economy.
The rand was at R8.19/dollar by 06:08 GMT from its
near-breach of support at R8.1980 in the New York close on Tuesday.
Retail sales growth, which has been one of the few positive
economic pieces of data this year, is expected to have slowed to 4.7% in June
compared to 6.4% May. The data is due at 11:00 GMT.
If it comes in softer than expected, it may push the rand
through R8.20 per dollar, which would open up much weaker levels.
“As oversold dollar positions unwind, we favour a return to
R8.55, and potentially higher, later this quarter,” said Judy Padayachee,
technical strategist at Absa Capital.
The rand had rallied to a R8.07 close last week into what
dealers said were overbought levels that set it up for a decline. It has
gradually retreated from that level, weakening for the third straight session
on Wednesday morning.
Yields on government bonds nudged slightly higher at 5.685% on the 2015 note and 7.5% on the 2026 issue.
Treasury will announce issuance plans for next week at 09:00
GMT.
Market players will also be watching to see if the violence
from union rivals at a Lonmin [JSE:LON] mine, which has killed 10 people so
far, spreads to the rest of the mining sector.
This would likely knock investor sentiment towards South Africa and badly hit the already struggling platinum sector, weakening its contribution to economic growth in the third quarter.
