South African bonds were marginally weaker on Thursday on a weaker rand and as the market awaited Friday’s nonfarm payroll data in the US.

The market is expecting that 195,000 jobs were created in the US in November, down from 261,000 in the previous month.

Friday’s data will give further clues as to the probability of an interest-rate increase in the US, at the US Federal Reserve’s last meeting for the year. A hike has largely been priced in, but further guidance on expected rate increases by the Fed in 2018 could support the greenback.

The rand was weaker as the dollar firmed below $1.18 to the euro, after the US Senate voted to pursue tax bill negotiations with the House of Representatives.

The initial sell-off on President Donald Trump’s risky announcement to recognise Jerusalem as the capital of Israel, was limited, said FXTM market strategist Hussein Sayed.

"Despite the many differences between lawmakers, it is highly expected that a final bill may see light before year-end, which may keep the dollar well-supported," he said.

At 3pm the R186 was bid at 9.23% from 9.16% and the R207 at 8.09% from 8.02%.

The rand was at R13.6397 to the dollar from R13.5051. The euro was at $1.1778 from $1.1796.

Rand Merchant Bank (RMB) analyst Michelle Wohlberg said trading was muted as the festive season approached.

"We had some distraction with the whole Steinhoff saga, but bonds finally managed to give back some of their gains," she said.

Foreign investors sold R1.32bn of local bonds on Wednesday with trading volumes and liquidity thin, Nedbank analysts said.

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