Johannesburg – The rand was softer at noon on the back of dollar strength‚ with all eyes on the US Federal Reserve’s Ben Bernanke’s speech on Tuesday‚ with possible quantitative easing news expected‚ as well as a local interest rate announcement on Thursday.
At 12:08 the rand was bid at R8.2720 to the dollar from its previous close of R8.2551. It was bid at R10.0727 to the euro from its previous close of R10.1204 and at R12.8331 against sterling from R12.8547 before.
The euro was bid at $1.2185 from its previous close of $1.2249.
“Ben Bernanke’s testimony will be to the Senate and Congress and any disappointment on this front would likely have a negative impact on global risk appetite and thus the rand‚” said Bruce Donald‚ rand strategist at Standard Bank.
“The market is not expecting a local rate cut this week; the FRAs are pricing in only a 25% chance of a 50 basis points cut. However‚ the FRAs are discounting an 80% chance of a 50 basis points cut within six months‚ which means that a more dovish tilt in the Bank’s rhetoric is probably priced in and thus the impact of such an outcome on local markets and the rand should be contained‚” he said.
SA has a busy data calendar this week and lots of secondary data from the US as well as data due out in Europe.
“Today’s US retail sales number is the most important. Wall Street is in focus as we enter the heart of the corporate earnings calendar. Friday’s Wall Street surge‚ which broke a six-day losing streak‚ came partly due to better than expected earnings‚” Rand Merchant Bank said.
“In Europe there will be a German parliamentary vote on the Spanish bank bailout. This should be passed with no problem‚ the bank said. Eurozone finance ministers will meet again on Friday to try to finalise the details of the bailout. Domestically‚ we have inflation and retails sales data this week‚ with all eyes on Thursday’s MPC meeting‚” the bank said.
