The rand remained a little stronger on Tuesday afternoon, but was off the day’s best levels as good news from the latest manufacturing data was seemingly already priced in.
A stronger dollar, together with weak local business confidence data, neutralised further gains in the rand, which earlier made an unconvincing attempt to break through R15/$, reaching a best level of R15.0108.
"The rand has thus far failed to make a meaningful attempt on the R15/$ level, and this remains pivotal," analysts at Nedbank Corporate and Investment Banking said.
However, the local currency has recovered measurably from its weakest level so far in September, when it hit R15.69 last week.
Output in the manufacturing sector rose by an annual 2.9% in July, up from 0.6% in the previous month and higher than the consensus forecast of 1.1%. The growth has raised the prospect of higher GDP growth but analysts have cautioned against over-optimism.
The manufacturing data suggests that the economy made a good start to the third quarter, Capital Economics analysts said. "But more timely surveys indicate that this momentum hasn’t been maintained," they said.
The RMB/BER business confidence index (BCI) fell to 38 points in the third quarter of 2018, from 39 in the second, in a further pullback from the first quarter’s reading of 45, when Cyril Ramaphosa became president.
After the euro firmed against the dollar in early trade, on the prospects of a Brexit deal, it reversed course during the afternoon amid indications that China might be seeking permission from the World Trade Organisation (WTO) to impose trade sanctions on the US.
At 3pm the rand was at R15.1565 from R15.20, at R17.5493 to the euro from R17.6293 and at R19.6786 to the pound from R19.8026.
The euro was at $1.1579 from $1.1595, after earlier firming to $1.1644.
At the same time the benchmark R186 government bond was bid at 9.195% from 9.225%, while the R207 was bid at 7.825% from 7.86%.
The US 10-year treasury was at 2.9575% from 2.9346%.
Last week saw R1bn worth of net foreign capital outflows from the bond market. For the year-to-date, outflows total R66bn, with R56.3bn of that from the bond market and R10bn from equity markets.
Risk-off sentiment is likely to persist. However, Nedbank analysts do forecast some near-term consolidation in local markets after the deep sell-off in the past month.