South African rand recovers slightly ahead of key U.S. data
(Updates prices to reflect afternoon trade)
July 7 (Reuters) - South Africa's rand recovered slightly on Thursday after hitting a 21-month low a day earlier as traders awaited key U.S. data that could give clues to the pace of inflation amid fears of a global recession.
At 1630 GMT, the rand ZAR=D3 traded at 16.7400 against the dollar, 0.34% firmer than its previous close. It hit a near two-year low of 16.8575 on Wednesday.
The dollar index =USD , which measures the currency against six counterparts, was trading at 107.15, not far from an overnight peak of 107.27, a level unseen since late 2002.
High yielding, but riskier assets such as the rand are relatively unattractive to investors against the safe-haven dollar at times of economic uncertainty.
Investors will now be keeping a close eye on the June non-farm payrolls report on Friday, to gauge the health of the economy, as they weigh the risks of a recession with the Federal Reserve hiking rates aggressively.
"The rand... is at risk of further weakness, as the U.S. continues to show a strong resolve to reducing inflation," Investec analyst Annabel Bishop said in a research note.
Stocks closed higher on the Johannesburg Stock Exchange (JSE), reflecting gains in global equities, which were buoyed by a jump in oil prices and tech stocks, including of chipmakers.
On the JSE the All-Share index .JALSH rose 3.27% to 67,909 points, while the Top-40 index .JTOPI closed 3.46% higher at 61,771 points, with market heavyweights Naspers NPNJn.J , Prosus PRXJn.J and Sasol Ltd SOLJ.J ending up 8.90%, 8.29% and 10.62% respectively.
The government's benchmark 2030 bond ZAR2030= was stronger, with the yield down 12.5 basis points to 10.590%.
Reporting by Anait Miridzhanian in Gdansk, Nellie Peyton in Dakar and Bhargav Acharya in Bengaluru; Editing by Sherry Jacob-Phillips, William Maclean
Disclaimer: The XM Group entities provide execution-only service and access to our Online Trading Facility, permitting a person to view and/or use the content available on or via the website, is not intended to change or expand on this, nor does it change or expand on this. Such access and use are always subject to: (i) Terms and Conditions; (ii) Risk Warnings; and (iii) Full Disclaimer. Such content is therefore provided as no more than general information. Particularly, please be aware that the contents of our Online Trading Facility are neither a solicitation, nor an offer to enter any transactions on the financial markets. Trading on any financial market involves a significant level of risk to your capital.
All material published on our Online Trading Facility is intended for educational/informational purposes only, and does not contain – nor should it be considered as containing – financial, investment tax or trading advice and recommendations; or a record of our trading prices; or an offer of, or solicitation for, a transaction in any financial instruments; or unsolicited financial promotions to you.
Any third-party content, as well as content prepared by XM, such as: opinions, news, research, analyses, prices and other information or links to third-party sites contained on this website are provided on an “as-is” basis, as general market commentary, and do not constitute investment advice. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, it would be considered as marketing communication under the relevant laws and regulations. Please ensure that you have read and understood our Notification on Non-Independent Investment. Research and Risk Warning concerning the foregoing information, which can be accessed here.