Picture: 123RF/LEON SWART
Picture: 123RF/LEON SWART

The rand was unchanged from overnight levels on Tuesday, but off the weakest levels of the day after the latest retail sales data held promise of improved GDP growth for the year.

Retail sales in July were 1.3% higher than in the same month in 2017, matching consensus forecasts. Year-to-date retail trade sales are 2.9% ahead of the 2017 figure, but this number has steadily been declining since March, capping further gains for the rand in a firmer dollar environment.

Retail growth numbers have steadily been declining since March, implying that consumer spending is running out of steam in the second half of the year, said FNB analyst Jason Muscat. "The latest data has been underwhelming and this is likely due to the additional strain of VAT increases and higher transport costs."

Globally, investor sentiment has turned negative as markets await the next trade-tariff development, Franklin Templeton analysts said. The US government had been expected to give an update after a public consultation period on further tariffs ended on September 6, however, there has been no announcement so far.

"Media reports suggested it could take weeks for the US authorities to decide whether to add a 25% tariff on a further $200bn of Chinese imports," Franklin Templeton said.

The rand found some support on Tuesday when ratings agency Moody’s upgraded its outlook for SA’s banking sector from negative to stable, but it still failed to break through R15 to the dollar.

The European Central Bank (ECB) may discuss the end of its quantitative easing programme on Thursday, which could benefit the euro, even though market participants have known of this for a while, Dow Jones Newswires reported. But the US is tightening its monetary policy and the lack of divergence between the two central banks will likely prevent euro strength.

However, the market clearly does not want to categorically exclude a euro rally either, in particular as, on the other side, the flat US yield curve suggests the dollar's long-term appreciation potential is limited on the monetary policy front, the newswire reported.

At 3.01pm, the rand was at R15.0536 to the dollar from R15.0551, at R17.4497 to the euro from R17.4694, and at R19.5786 to the pound from R19.6242. The euro was at $1.1591 to the dollar from $1.1605.

Local bonds were unchanged with the R186 bid at 9.205%. The US 10-year treasury was last seen at 2.9566% from 2.9777%.