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Rand mostly flat ahead of Fed testimony

Johannesburg - The rand hovered near overnight levels in early Wednesday trade, ahead of testimony by US Federal Reserve chairperson Ben Bernanke that should give further clues on its monthly asset purchasing programme.

Retail sales data due out at 13:00 are likely to cement market expectations that the South African Reserve Bank (Sarb) will keep interest rates at 40-year lows this week, as it balances the need to rein in inflation with that of supporting an ailing economy. 

By 08:46 the rand traded at R9.86/$, just 0.15% firmer than its Tuesday close at R9.8750 in New York.

Government bonds followed suit, with yields slightly lower from the previous day.

The 2026 benchmark came off one basis point to 7.875% and the 2015 paper edged half a basis point lower to 5.985%.

Domestic factors, including labour strikes that have weighed on sentiment, are taking a back seat as speculation swirls on when the Fed will start down scaling its $85bn a month asset purchases, which had poured cheap money into emerging markets.

Caution should be the order of the day ahead of Bernanke's statement to Congress, said Standard Bank trader Jan de Fouw in a note to clients.

"We have seen how much the market reacts to anything Bernanke says over the past two statements so having a massive position now would be just silly," he said.
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Rand - Dollar
19.00
-0.5%
Rand - Pound
24.02
-0.5%
Rand - Euro
20.51
-0.2%
Rand - Aus dollar
12.35
-0.0%
Rand - Yen
0.13
-0.6%
Platinum
900.15
+0.4%
Palladium
1,000.00
-0.2%
Gold
2,210.45
+0.7%
Silver
24.60
-0.2%
Brent Crude
86.09
-0.2%
Top 40
68,142
+0.7%
All Share
74,329
+0.6%
Resource 10
56,957
+2.3%
Industrial 25
103,635
+0.4%
Financial 15
16,485
-0.2%
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