Johannesburg - The rand remained on the back foot in early trade on Monday as the US dollar found favour on rising risk aversion.
At 08:45 the rand was bid at R9.8887 to the dollar from an overnight close of R9.8020. It was bid at R13.2605 to the euro from a previous R13.1787 and at R14.8858 against sterling from R14.7621 before.
The euro was bid at $1.3409 from $1.3461 overnight.
A local currency trader said the rand's move weaker had been on the cards after the poor US jobs data.
He added that the theory is that if global markets stabilised, the rand would do well. But as that has not happened the currency is seeing wild swings due to the global uncertainty.
He expects the rand to encounter resistance at R9.96, but should that level be breached, it could move up to R10.10-R10.15.
"But it's starting to look toppish now. The dollar has had a big move since Friday and the $1.33 level will be a key one for the euro," he noted.
"The rand is not been driven by fundamentals, it's being driven by world markets," he concluded.
Dow Jones Newswires reports the swift return of risk aversion and weaker regional stock markets in response to the grim global growth outlook boosted the dollar against the euro in Asia on Monday, but the flight to safety also caused the dollar to slip against the yen.
'Knee-jerk' spike
The latest drive for safe haven assets was fuelled by dire jobs data in the US on Friday showing the world's largest economy shedding jobs at the fastest pace since 1945.
Stocks in Asia were heavy as a result, and the gloomy mood, coupled with a bearish outlook for the eurozone, helped the dollar and yen bid tone, traders said.
This week's focus is squarely on Thursday's meeting of the European Central Bank, which is expected to reduce rates by 50 basis points in response to the worsening economic picture.
"All eyes are on the ECB; the expectation is for more cuts," said Standard & Chartered Strategist Callum Henderson, who added the ECB is also expected to signal more cuts to follow, further eroding the euro's support.
Although the market is pricing in a half-percentage point cut, policy makers could surprise by holding rates steady, said Barclays Capital Strategist David Forrester.
"The ECB will be critical for the euro this week. If they do hold off in line with our economists' expectations, we anticipate that would be a temporary boost."
Forrester said traders would soon sell into any "knee jerk" spike, as ECB President Jean Claude Trichet will take a dovish tone at his post-meeting news conference.
Standard & Chartered's Henderson said there was good support for the euro around $1.3400, but with risk aversion unlikely to ease soon, the dollar's bid tone should hold up.
"Risk appetite was perking up at the start of last week, and has fallen off sharply and has been yet again dollar positive," he said.
The dollar will continue to gain as equity markets and high-yielding currencies suffer, although the picture is less positive against the yen, Barclay's Forrester said.
- I-Net Bridge