The South African rand weakened a smidgen in midday trade today as a downbeat change in global sentiment saw the euro relinquish earlier gains.
At 12.15 the rand was bid at 7.7356 to the dollar from 7.7239 at its previous close. It was bid at 9.2567 to the euro from its previous close of 9.2486 and was at 11.1914 against sterling from 11.1531.
The euro was bid at US$1.1970 from $1.1968 overnight.
A local trader said the rand would continue to track the euro, while remaining in a 7.70 to 7.80 per dollar range. Depending on what happens with
the single currency, the rand could test 7.70 today, the trader added.
RMB analysts said in their morning report that the price of gold has surged to unprecedented highs as mounting concerns over the depth of the Eurozone debt crisis and its impact on the economic recovery, continues to stoke a flight to safety. This has boosted commodity-linked currencies, notably the AUD and NZD, which have derived support from the higher price though fluctuations in Asian equity markets, have capped the extent of currency gains.
"The ZAR is quite fortunate in this regard as it bears a stronger correlation to the Dow Jones Industrial index, which leapt 1.26% overnight owing to cheerful comments made by the Fed's chairman Bernanke on European policy-makers' commitment to ensuring the preservation of the EUR and the survival of the Eurozone," they said.
Dow Jones Newswires reports that after an early improvement in the market's mood, that lifted the euro as well as some high yielders, sentiment has slumped back again today.
The euro lost most of its early gains and the dollar was mixed with investors once again looking for clarification on when U.S. interest rates might start rising.
Later in the day, Federal Reserve Chairman Ben Bernanke is scheduled to testify on the economy in front of the House Budget Committee and the Federal Reserve is due to publish its latest Beige Book.
Analysts said they will be looking to see if an upbeat assessment of the U.S. recovery earlier this week, which helped to boost equities briefly, will be repeated in his testimony as well as in the Beige Book.
Currencies started the day in a positive mood as a stronger-than-expected 4% rise in Japanese machinery orders and a report that Chinese data due tomorrow will show a 50% rise in exports last month lifted Asian equity markets and encouraged investors back into riskier assets, including the euro and the Australian dollar.
