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Johannesburg – The rand was under-pressure‚ tracking the euro weaker in afternoon trade‚ in the wake of weak US jobs data and growing uncertainty lingering over Europe.
US non-farm payrolls came in short of market expectations at 80 000 new jobs in June‚ short of the estimated 100‚000‚ pointing to further weakness in the world’s largest economy.
The poor data came just after similar disappointing data on the US manufacturing and services sectors.
At 15:55‚ the rand was bid at R8.2668 to the dollar from its previous close of R8.1347. It was bid at R10.1690 to the euro from its previous close of R10.0690 and at R12.8066 against sterling from R12.6167 before.
The euro was bid at $1.2307 from its previous close of $1.383.
“The US data fell short of expectations. We have been tracking the euro and it seems it will be much of the same into next week‚” a local trader said.
Why has the soft jobs report failed to hurt the dollar today? Mizuho's Neil Jones argued the report wasn't weak enough to launch QE3‚ Dow Jones Newswires reported.
More importantly‚ investors may perceive the weak report as an addition to the broader backdrop of a global slowdown - in that case‚ the dollar is favoured as a haven currency. Jones said the jobs reading prompted him to increase short bets on the euro versus the dollar. "The euro under-perform on signs of more-sluggish global growth given the eurozone will rely on external demand to stand any chance of revival." Jones bets the euro will drop to at least $1.15 before the year's end.
