Publications
Partners
Johannesburg - The rand was slightly weaker in early trade on Monday on negative flows. Traders say the cancellation of the HSBC/Nedbank deal takes away an expected $5bn inflow.
Portfolio in flows also slowed - in fact the past weeks have only seen marginal net outflows. Traders say the focus should still be on the US dollar.
At 09:00 local time the rand was bid at R6.8710 to the dollar from R6.8070 at the previous close. It was bid at R9.5298 to the euro from R9.4960 before and at R10.8997 against sterling from R10.8591 at its previous close.
The euro was bid at $1.3876 from $1.3961 on Friday.
"The rand is weakening on emerging markets as risk trade gets questioned," said a trader.
RMB analysts said in the morning report that emerging markets remained the game with EM bond funds still seeing record inflows while EM equity funds are also suddenly seeing a surge in interest.
As such, the outlook for capital inflows remains very good, even if they are currently disappointing.
"Whether all this makes much difference is open to question. At present it's all really a USD story. Chairperson Ben Bernanke's speech on Friday cemented expectations of another round of monetary easing in the US. This sent the USD temporarily stronger but over the weekend we have seen a bout of aggressive unwinding of USD shorts. USD/ZAR has lagged this adjustment, implying risk of moves into the R6.90s this morning. The USD/ZAR outlook in fact remains mostly determined by the vagaries of the USD," they added.
Dow Jones Newswires reports that the euro fell against the dollar and yen in Asia on Monday as investors sold the common currency following dovish comments from European Central Bank president Jean-Claude Trichet during the weekend.
Trichet on Sunday pushed back against hawkish remarks from governing council member Axel Weber last week. Weber had said the central bank shouldn't wait long to withdraw from its extraordinary stimulus and should phase out its bond-buying programme, but Trichet said the majority of the governing board did not agree with that view.
The euro's fall on Monday came as the dollar clawed back some ground against a wide range of currencies. Helping the US unit was a sense that expectations for more Federal Reserve easing are already priced into the market. US Treasury yields rose Friday despite Fed chairperson Bernanke saying earlier in the day the central bank is ready to take more easing action.
"The expectations for more Fed easing do seem more fully reflected after the Bernanke speech," said Hiroshi Maeba, a senior foreign exchange dealer at Nomura Securities. "Now I think we will see some more adjustment that will help the dollar and hurt the euro."
Portfolio in flows also slowed - in fact the past weeks have only seen marginal net outflows. Traders say the focus should still be on the US dollar.
At 09:00 local time the rand was bid at R6.8710 to the dollar from R6.8070 at the previous close. It was bid at R9.5298 to the euro from R9.4960 before and at R10.8997 against sterling from R10.8591 at its previous close.
The euro was bid at $1.3876 from $1.3961 on Friday.
"The rand is weakening on emerging markets as risk trade gets questioned," said a trader.
RMB analysts said in the morning report that emerging markets remained the game with EM bond funds still seeing record inflows while EM equity funds are also suddenly seeing a surge in interest.
As such, the outlook for capital inflows remains very good, even if they are currently disappointing.
"Whether all this makes much difference is open to question. At present it's all really a USD story. Chairperson Ben Bernanke's speech on Friday cemented expectations of another round of monetary easing in the US. This sent the USD temporarily stronger but over the weekend we have seen a bout of aggressive unwinding of USD shorts. USD/ZAR has lagged this adjustment, implying risk of moves into the R6.90s this morning. The USD/ZAR outlook in fact remains mostly determined by the vagaries of the USD," they added.
Dow Jones Newswires reports that the euro fell against the dollar and yen in Asia on Monday as investors sold the common currency following dovish comments from European Central Bank president Jean-Claude Trichet during the weekend.
Trichet on Sunday pushed back against hawkish remarks from governing council member Axel Weber last week. Weber had said the central bank shouldn't wait long to withdraw from its extraordinary stimulus and should phase out its bond-buying programme, but Trichet said the majority of the governing board did not agree with that view.
The euro's fall on Monday came as the dollar clawed back some ground against a wide range of currencies. Helping the US unit was a sense that expectations for more Federal Reserve easing are already priced into the market. US Treasury yields rose Friday despite Fed chairperson Bernanke saying earlier in the day the central bank is ready to take more easing action.
"The expectations for more Fed easing do seem more fully reflected after the Bernanke speech," said Hiroshi Maeba, a senior foreign exchange dealer at Nomura Securities. "Now I think we will see some more adjustment that will help the dollar and hurt the euro."
