The volatile rand was back to its winning ways on Thursday trading 1.66% stronger to the dollar at R13.29 by 08:30, as yield players return to their risky emerging market currencies.<\/p>\n
\u201cRisk on\u201d is back after a day’s break, said Umkhulu Consulting\u2019s Adam Phillips in a note on Thursday. \u201cI would think that my R13.20\/$ support level is going to be tested,\u201d he said.<\/p>\n
Despite good support coming in for the dollar on Wednesday, it all came to a short-term end at about 20:00 when the minutes from the July US Federal Reserve meeting showed that the majority did not favour putting up rates soon, Phillips said.<\/p>\n
\u201cThe market had got ‘puffed’ into thinking that a rate hike could happen after several members made statements on Tuesday that rates could move up in September,\u201d he said.<\/p>\n
An interest rate hike in the US will likely see the rand deteriorate, so analysts are watching the US Fed with a keen eye to see what decision they might take.<\/p>\n
South Africa \u2013 which slipped away from a rating downgrade earlier this year \u2013 is now the best performing emerging market for bonds and currencies. However, analysts caution that this could change very quickly.<\/p>\n
The rand was also trading 1.22% stronger at R17.36 to the pound and 1.27% stronger at R15.03 to the euro.<\/p>\n
When will the US Fed end the good party?<\/strong><\/p>\n The Fed\u2019s role is often said to be to take away the punchbowl just when the party is getting good, RMB\u2019s John Cairns said in a note on Thursday.<\/p>\n \u201cBut we do not seem to be there yet,\u201d he said. \u201cThe minutes showed that, as of late July, \u2018some\u2019 Fed decision-makers said they would like to raise rates in September, but that the majority wanted more evidence of growth and inflation before acting.<\/p>\n \u201cThe minutes can\u2019t be said to have surprised anyone, but there is still relief that the Fed did not take a more hawkish tone,\u201d he said. \u201cSo the party continues and risk assets can resume their rally.\u201d<\/p>\n Local politics impacts rand<\/strong><\/p>\n He said the rand\u2019s underperformance unwound on Thursday as local political news turned more positive.<\/p>\n \u201cGovernments for all metros seem agreed, although some uncertainty remains over Johannesburg,\u201d he said.<\/p>\n RMB analyst Gordon Kerr added that some \u201cdecent rand strength was noted once the EFF confirmed that it will be voting alongside the DA in the major metros\u201d.<\/p>\n On the bonds side, it was just another range-bound market day, according to Kerr. \u201cIt\u2019s been a while since we have traded in such a tight range, with the market becoming a bit desperate for something to happen,\u201d he said.<\/p>\n \u201cOn the data front, retail sales disappointed to the downside, continuing to highlight the weak growth fundamentals,\u201d he said. \u201cWhile the data saw the dollar\/rand trade lower, this proved to be short-lived, with bonds not reacting on the move.\u201d<\/p>\n The next important event is when US Fed chair Janet Yellen speaks at Jackson Hole in the US on August 26.<\/p>\n \u201cWhat is clear is that employment is not a concern in the US, it is rather inflation,\u201d said Phillips. \u201cThe next Fed meeting is around September 21 and already the dollar bulls are showing their concern.<\/p>\n \u201cI would think a rate hike is unlikely and from there the next meeting will be too close to presidential election to do anything,\u201d he said.<\/p>\n News24<\/a><\/p>\n Rand strength is not going to last: analyst<\/strong><\/a><\/p>\nMore on the rand<\/h3>\n