Johannesburg - The rand nudged higher against the dollar in
early Wednesday trade but was still stuck in a wide range and looking to break
through R8.11/dollar resistance to firmer levels.
The rand was up at R8.1660 to the dollar at 06:05 GMT,
gaining on a close of R8.1755 on Tuesday. It firmed as far as R8.1190 on
Tuesday and a break through R8.11 is on the cards.
“The rand has continued to consolidate last week’s gains, on
the back of the risk-on global trading environment. With global equity markets
on the march and the euro still holding onto last week’s strength, it seems
unlikely that the rand will retreat in the short term,” Absa Capital said in a
The rand had been lethargic this week, not moving out of
levels set on Friday as it waits for the next set of developments from Europe
that may shift risk sentiment.
Volumes have been thin and the rand has been in range bound
since the European Central Bank reassured markets about supporting the euro
“These are real summer markets. We are in ranges and still
headline driven, but we’ve been very light on headlines in the last couple of
days,” said Jim Bryson, rand trader at Rand Merchant Bank.
The rand needs to break through R8.11 resistance to open up
stronger levels at around R8.06/05.
Later in the session the market will look to manufacturing
and mining data for clues on the state of the sectors and their contribution to
growth this year.
The purchasing managers’ index, an indicator of production activity,
fell into contraction territory in June, signalling weak output growth in the
Government bonds were slightly weaker but yields could track
lower if the manufacturing number comes out worse than expected.
In early trade the three-year bond nudged up a basis point
to 5.585% while the 14-year paper added half a basis point to 7.37%.
Economists expect production growth to have dropped to 3.2%
in June from 4.2% in May. The data is due at 11:00 GMT.
The Econometer, a key Reuters monthly survey of economists
expectations of the economy, is due at 09:30 GMT.