The rand slipped against the dollar in midday trade, in what a dealer described as both “tricky” and “erratic” trading conditions ahead of the release of local and international data later in the session.
|||The rand slipped against the dollar in midday trade on Thursday, in what a dealer described as both “tricky” and “erratic” trading conditions ahead of the release of local and international data later in the session.
At 11:21 local time, the rand was bid at 6.8784 to the dollar from its previous close of 6.8522. It was bid at 9.7415 to the euro from 9.7709 before, and at 11.0854 against sterling from 11.0603 previously.
The euro was at US$1.4175 from US$1.4268.
The dealer said that the rand had tested 6.89 against the dollar, which triggered off “decent dollar selling at those prices”. He noted that a number of dealers were active in the market, with a sense that they may have been caught short ahead of a crucial euro-zone summit meeting and, locally, the SA Reserve Bank's Monetary Policy Committee meeting. “The market has been tricky, and rather erratic for those reasons,” he added.
Standard Bank analysts said in a morning note that the rand had recouped a bit more ground - but all eyes were still on the US and European Union (EU) debt.
“The rand recovered further on Wednesday on growing hopes that the euro zone and US would soon decide on how best to deal with their debt.
“SA consumer inflation data was in line with consensus yesterday, while the disappointing SA retail sales data and on-going strike action were largely ignored - even though the latter two should ordinarily have been rand-negative.”
Standard Bank added that today, the SA Reserve Bank's Monetary Policy Committee meeting at 15:00 could also prove a non-event for the rand because the focus for the currency was still the level of global risk appetite.
“In this regard, the EU leaders' meeting today will be of critical importance. Rand bulls will be hoping for a concrete plan to deal with this region's debt burden. Domestically, rand bulls would want a more upbeat policy statement from the SA Reserve Bank.”
Meanwhile, Dow Jones Newswires reported that, in foreign exchange markets, the euro rose against the US dollar after the announcement that France and Germany had reached an agreement on a strategy for dealing with the Greek debt problem.
German chancellor Angela Merkel and French president Nicolas Sarkozy reached a compromise over a fresh bail-out for Greece late on Wednesday ahead of Thursday's summit.
The six-hour meeting of the two leaders, which European Central Bank president Jean-Claude Trichet also attended, managed to find a mutually acceptable formula for how to involve Greece's bondholders in the expected new rescue package.
Still, there remains a degree of caution around the markets.
“Today is the day that the EU has a chance of winning a big battle even if the war proves far more difficult to win over the next few weeks, months and probably years,” said Deutsche Bank. “Let's hope they don't disappoint.”
And there will need to be progress at this summit because the latest manufacturing and service sector purchasing managers' survey for July show activity within the euro zone at a 23-month low. - I-Net Bridge
Source: http://www.iol.co.za/rand-erratic-ahead-of-data-releases-1.1103450
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