Strong dollar pressures rand

The rand weakened against a globally stronger dollar in early trade as the greenback was buoyed by expectations of strong US payrolls data.

“A broad-based stronger USD environment drove emerging market currencies weaker,” Barclays economist Peter Worthington says. “We continue to favour fading (rand) rallies in the run up to Friday’s US payrolls print.”

Robust employment figures from the United States will confirm the resilience of the rebound by the world’s top economy and further raise the likelihood that its central bank will finally lift interest rates at its December policy meeting.

Investors shrugged off China’s services sector data which came in relatively stronger, easing concerns over persistent weakness in the economy.

“The main focus will be on the US ISM (non-manufacturing) number, this afternoon. US trade data as well as the ADP employment report – the latter acting as a guide for the official payroll report,” Rand Merchant Bank currency strategist John Cairns says.

A likely strong labour momentum will be enough for the Fed to consider an interest rate hike this year, which could hurt emerging market currencies like the rand.

Government bonds on the other end bucked the trend, strengthening across the curve with the benchmark 2026 paper down 3,5 basis points at 8,4%.

By Nqobile Dludla for Sunday Times Business

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