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Johannesburg - The rand softened in morning trade on Tuesday, tracking a slightly weaker euro.
At 08:57 local time the rand was bid at R7.3680 to the dollar from R7.3340 at the previous close. It was bid at R9.3035 to the euro from R9.2888 before and at R11.3510 against the sterling from R11.3362 at its previous close.
The euro was bid at $1.2633 from $1.2663 overnight.
A trader said that the local currency was shadowing the euro's movement against the dollar, while data out later in the US expected to provide further direction.
RMB analysts noted in a morning report that after a break on Friday the slide in US equities on the back of fears over the economy have resumed, however, the impact on the rand remains muted, only coming through the reaction in euro/US dollar. "This puts US dollar/rand up at the mid-R7.30s this morning but with a continued upside bias. A move through resistance at R7.40/42 only looks likely on a sustained break in euro/US dollar below $1.2600," the analysts said.
RMB pointed to event risk today, with eurozone unemployment and inflation data this morning and US housing prices and consumer confidence this afternoon, along with other secondary data. "Any negative news could be accentuated as US equity indices are on the cusp of breaking key levels - 10 000 on the Dow and 1 040 on the S&P. And remember that event risk only grows as the week progresses with key global manufacturing sector data tomorrow and then US employment data on Friday. It certainly is going to be an interesting week, and let's see if US dollar/rand can finish below or above R7.42," RMB said.
Dow Jones Newswires reported that the market's focus is shifting to how US and eurozone indicators and governments' economic stance affects equities, traders said.
Investors will closely watch a press conference after the European Central Bank's policy-setting meeting on Thursday, and US non-farm payrolls data for August due on Friday, traders said. The yen may strengthen further if the outcome disappoints, adding to views that the pace of the global economic recovery may slow, traders said.
Economists surveyed by Dow Jones Newswires expect non-farm payrolls to post 110 000 job losses in August from a 131 000 fall in July. August's unemployment rate may come in at 9.6%, compared with 9.5% in the previous month.
Other key events include US employment report from Automatic Data Processing and the Institute for Supply Management Manufacturing Report on Business, both for August.