Rand weaker, eyes on US data

Johannesburg - The rand was little changed from its overnight levels in opening trade on Friday with markets ultra-cautious ahead of the release of US job data this afternoon.

At 08:15 the rand was bid at R7.4195 to the dollar from R7.4000 at its previous close. It was bid at R11.1595 to the euro from its previous close of R11.1258 and was at R12.2420 against sterling from R12.2278.

The euro was bid at US$1.5047 from US$1.5052 overnight.

RMB analysts John Cairns and Nema Ramkhelawan in their morning report noted that markets are in ultra-cautious mode ahead of the all-important US employment statistics this afternoon after President Obama warned that the unemployment rate "might tick up".

"Was this a way to send a warning that the numbers will be a shocker? This also comes after US ISM data yesterday showed the service sector unexpected declined in November.

"With the manufacturing ISM also dipping earlier in the week, although still in positive territory, it may just be that the US economic recovery is slowing - although it is more likely that these are temporary and we will probably see another few quarters of good growth before a double dip, if any, kicks in.

"While the ECB was more aggressive than expected in how it's withdrawing emergency lending, they have been careful to note that this is not meant as a signal on rates.

"As is the case in South Africa, the expected timing of the hiking cycle both from the ECB and the Fed, have had to be pushed out," the analysts said.

They added that for a while yesterday it seemed almost certain that USD/ZAR was going to break lower, notably as EUR/USD came within a whisker of breaking past its previous high of $1.5144.

"The uncertainty though has taken risky assets off their highs. USD/ZAR at R7.40 looks set for a volatile day but the scope for a break lower has certainly diminished," they noted.

- I-Net Bridge