The rand held on to firmer levels against the dollar on Friday afternoon despite US nonfarm payroll data coming in better than expected, thereby increasing the likelihood of a more aggressive stance on interest rates by the US Federal Reserve.

The rand was off its best levels of the day, but was still firmer when compared to overnight levels. The dollar rose sharply against the euro, as did US bond yields, on the prospects of further hikes.

"The latest data does offer further support to the view that the US economy is very strong and that things are looking very positive," Oanda analyst Craig Erlam said.

Nonfarm payrolls increased by 201,000 in August, following an downwardly revised 147,000 in July and above market expectations of 191,000.

In August, average hourly earnings for all employees on private nonfarm payrolls rose by 10 US cents to $27.16. Over the year, average hourly earnings have increased by 77c, or 2.9%, from an expected 2.7%, and the highest increase since 2009.

The market is now pricing in a 96.3% likelihood of a hike by the Fed later in September, promising little let-up for the rand, which has depreciated 18% against the greenback so far in 2018.

Analysts expect global factors to effect the rand, as the daily forex turnover for the rand as a percentage of annual GDP is a hefty 18%, but South African trade accounts for less than 1% of that.

"Hence the starting point for the rand should always be to understand what is going on globally with commodity prices, Fed interest rate cycles, global growth and trade or simply the outlook for the dollar," Nedbank analyst Mehul Daya said.

He said if local and global conditions look good, the rand will do very well, while it is likely to fare badly if negative local conditions combine with bad global conditions, which has been the case over the past few weeks.

"Even when local conditions appear positive, such as with Ramaphoria, and global conditions are unsettled, the rand does not perform that well," Daya said.

At 3pm the rand was at R15.187 to the dollar from R15.3343, at R17.5632 to the euro from R17.8246 and at R19.6846 to the pound from R19.8223.

The euro was at $1.1565 from $1.624.

Local bonds tracked rand gains, with the benchmark R186 10-year government note last seen at 9.15% from 9.18%.

The US 10-year treasury was at 2.9282% from 2.8771%.