The rand lost ground against the dollar in morning trade on Tuesday ahead of a quarterly labour force survey from StatsSA, which will outline the country’s unemployment rate.
Reuters reported that the dollar was buoyed by rising US bond yields. By 10h00 on Tuesday, the rand traded 0.69% weaker at R12.41, with analysts at Sable Forex expecting a daily range of between R12.20-R12.45.
“On the local front, the unemployment rate of South Africa is set to be released at 11:30 local time. The consensus is that unemployment will move up from 26.7% to 28%,” Sable Forex said.
This, it said, does not bode well for the rand, and if data comes out as anticipated, the rand should weaken. “Other than that, expect the rand to be moved by international factors more than local factors this week.”
Reuters noted that the rand slipped late on Monday having moved to a three-week high against the dollar late last week.
Investors will scrutinise the data for signs that an economic recovery has built momentum since President Cyril Ramaphosa’s election in February, it said.
The local unit was also softer against the other major currencies. The pound has come under pressure in recent weeks after the Bank of England (BoE) kept interest rates unchanged. “This was expected but was accompanied by an unexpected further widening of the trade deficit, together with a lower forecast for future growth. This turned investors sour on the GBP,” said Sable Forex.
“Today we have a flurry of data, first up we have UK average hourly earnings. This will definitely move the market, but analysts are not sure exactly what the data will say. Shortly after, the UK inflation report hearings will commence, giving an outline of expected UK inflation going forward. From the information released by the BoE last week, we can expect this to be a negative risk factor to the Pound Sterling.”
Euro growth data is set to be released around midday, this is expected to come in unchanged from last month, Sable Forex analysts said. Any divergence from this will result in big market movement. Tuesday ends off with US retail sales data, an improvement is expected which would support a dollar rally.
- Dollar/Rand: R12.41 (+0.69%)
- Pound/Rand: R16.79 (+0.49%)
- Euro/Rand: R14.80 (+0.69%)