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Rand's weakening trend persists

Johannesburg - The rand remained softer in afternoon trade on Thursday as the currency's weakening trend persisted.

"The market is really waiting for the US non-farms payroll data for December that's out tomorrow [Friday]," a currency analyst said.

"If that number is a lot stronger than expected, then the dollar rally will persist until next week - but if not, the rand should claw its way back," he added.

At 15:40 local time, the rand was bid at 6.7605 from 6.7029 at its previous close. It was bid at 8.8529 to the euro from 8.8303 before and at 10.4667 against sterling from 10.4041 at its previous close.

The euro was bid at US$1.3110 from its close before of US$1.3160.

Meanwhile, Dow Jones Newswires reported that currency markets were largely subdued in European trading hours on Thursday, with no clear trend emerging as caution set in ahead of Friday's key US nonfarm payrolls report, which was widely expected to be very strong after the upbeat labour report published on Wednesday by Automatic Data Processing (ADP).

"In an otherwise quiet session, sterling took centrestage after a disappointing report on the country's dominant services sector caused a sell-off in the pound."

The UK currency sank to session lows against the euro and dollar after research group Markit and the Chartered Institute of Purchasing & Supply said the services Purchasing Managers' Index dropped to 49.7 in December from 53.0 in November.

Thursday's figure was sharply weaker than expected as economists were forecasting only a small drop to 52.5, according to a Dow Jones Newswires poll last week.

More broadly, the dollar was little changed against the yen in Europe after hitting a two-week high versus the safe-haven currency in Asia after the report from ADP showed employers added 297 000 private sector jobs last month, far exceeding the forecast of a 100 000 gain.

The report boosted the dollar overnight and the currency largely held on to those gains in European hours, Dow Jones newswires reported.

"The likelihood of the official labour market report coming in above expectations as well has risen," said Commerzbank strategists in a note to clients.

"With a strong labour market report, the start into 2011 could turn out to be quite successful for the dollar, as fears that the Federal Reserve might extend the quantitative easing measures further are then likely to be a thing of the past."

With so much focus on the report, currency markets were expected to remain quiet in the run-up to the data's release, due on Friday at 13:30 GMT.

"Everyone will be looking at the nonfarm payroll data coming out of the US this Friday. If we get more positive news from the US in the coming days, this may put additional pressure on the Aussie dollar," said Jian Wei, senior dealer with City Index in Sydney.

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Rand - Dollar
19.16
-0.3%
Rand - Pound
23.83
-0.2%
Rand - Euro
20.48
-0.2%
Rand - Aus dollar
12.46
-0.5%
Rand - Yen
0.12
-0.2%
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