Rand makes come-back

The rand showed a recovery in late afternoon trade following the release of better than expected US non-farms payroll data.

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The rand showed a recovery in late afternoon trade on Friday following the release of better than expected US non-farms payroll data.

Just before the data was released, dollar rand was bid at 6.9155 and following the release of the jobs figures, it was firmer at 6.8840.

On Thursday, the rand fell over 3% against the dollar as worries deepened that bad US data and European debt would lead to a global slowdown.

“We started off a levels around 6.94 today and we didn't see much momentum - the rand was just holding on to its weaker levels,” a market analyst said.

“However, the rand was driven firmer by the US non-farm payrolls data - that was all markets were really concerned with today.”

He added that the rand's move to the topside on Thursday had been “a bit overdone and now we expect a consolidation below 6.89.”

However, the payrolls data was really only one release of many over the past days that had come in better than expected, the analyst said.

“There are still risks in terms of global growth outlook and the situation in Europe is worrying, even though the European Central Bank has come back into the market to buy up bonds.

“Bond yields haven't really come down much yet and there's potential for more volatility - we'll see paring of recent rand losses in the next few sessions.”

At 15:45 local time, the rand was bid at 6.8687 to the dollar from its previous close of 6.9355. It was bid at 9.7403 to the euro from 9.7499 before, and at 11.1956 against sterling from 11.2493 previously.

The euro was at US$1.4196 from US$1.4062.

Dow Jones Newswires reported earlier that the US economy added more jobs than expected in July and the unemployment rate edged down, providing some hope that the nation would avoid another recession.

Nonfarm payrolls rose by 117,000 last month as private-sector employers added 154,000 jobs, the Labor Department said on Friday in its survey of employers. Payroll data for the previous two months were revised up by a total 56,000, to show increases of 46,000 jobs in June and 53,000 in May.

The unemployment rate, which is obtained from a separate household survey, dropped to 9.1% last month from 9.2% in June. However, that still left almost 14 million Americans who would like to work without a job.

The numbers were better than expected and might help lift stock markets, which fell sharply on Thursday amid concerns that a new recession might be around the corner, Dow Jones Newswires added.

Economists surveyed had forecast that payrolls would rise by 75,000 in July and that the jobless rate would remain at 9.2%.

The US economy slowed sharply in the first half, heightening concerns it could fall back into recession only two years after the end of the severe downturn that followed the financial crisis. The better-than-expected jobs report took some pressure off the Federal Reserve and President Barack Obama's administration to take immediate steps to boost the economy. Policymakers' tools have been limited by an already high public debt and interest rates close to zero.

“The big message of today's jobs report is that although the economy has slowed, there is no sign that it has slipped into recession,” analysts at RDQ Economics wrote in a note.

Friday's report showed private-sector employers, which accounted for about 70% of the workforce, added 154,000 jobs in July, up from 80,000 in June. Several major industries showed job gains.

Manufacturing employment increased by 24,000 in July, more than double the gain seen the previous month. Economists had been expecting a bounce-back as disruptions to production stemming from Japan's earthquake were now easing. Health care employment grew by 31,000 and retail trade added 26,000 jobs.

However, government employment continued to fall - by 37,000 - for the ninth month in a row. State and local governments, which have been struggling to close budget gaps, showed job losses.

Even though the jobs report for July was better than expected, the labor market remained weak. Facing re-election in 15 months, Obama this week called on Congress to extend unemployment benefits and a payroll-tax credit after lawmakers approved a long-awaited deal to raise the nation's debt limit. But he's likely to face stiff opposition from Republicans worried about government spending. - I-Net Bridge

Source: http://www.iol.co.za/rand-makes-come-back-1.1113015

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