Rand firms as dollar softens on disappointing US data
The rand was firmer on Friday afternoon as the dollar weakened following the release of worse-than-expected US jobs data. Total nonfarm payrolls increased by 157,000 in July, below the expected 190,000, and their lowest gain since March.
The US unemployment rate fell to 3.9% from 4%, while average hourly earnings — an important barometer for inflationary pressures in the US — increased 2.7%, unchanged from the previous month.
The numbers makes it unlikely that the US Federal Reserve will adopt a more hawkish stance for the rest of 2018. The market has already priced in two further rate hikes, in September and December, while rates were unchanged following its latest meeting, on Wednesday.
"Inflation is very close to the desired target and the Fed should be quite close to the neutral rate near year-end, which argues for a slower pace of hikes next year," BlackRock analysts said in a note. The neutral rate is the point where interest rates neither stimulate nor restrain economic growth.
At 3pm the rand was at R13.3526 to the dollar from R13.4605, at R15.4836 to the euro from R15.5954 and at R17.3809 to the pound from R17.5146.
The euro was at $1.1596 from $1.1584, after firming to $1.1611 earlier.
Despite Friday’s slight recovery, the rand will still end the week down, having lost 1.31% to the dollar since Monday. After a strong start to the week, it fell more than 2% against the greenback following the ANC’s commitment to the expropriation of land without compensation, and growing global trade jitters.
Local bonds were little marginally weaker despite the firmer rand on Friday, with the R186 bid at 8.68% from 8.665%.
The US 10-year treasury was last seen at 2.9697% from 2.9855%.