JOHANNESBURG – South Africa’s rand slipped on Thursday after a rally to a two-and-a-half month peak, with traders booking profits ahead of mining and manufacturing data and a policy announcement by the European Central Bank that could cool demand for emerging market assets.
At 0630 the rand was 0.2 percent weaker at 12.8150, retreating from an overnight peak of 12.7300.
With the likelihood of an increase in lending rates this month by the Federal Reserve diminishing and gold prices climbing, the rand has easily hurdled technical resistance at 13.20, 13.00 and 12.84 with scope for further strength.
But caution has set in at these levels, with focus pivoting to South Africa’s fundamentals. Mining production is expected to show modest growth but manufacturing is likely to remain in contraction.
Later in the session, the ECB is set to lay the groundwork for stimulus reduction at Thursday’s meeting, but will probably hold off on any major commitment.
Bonds were firmer, with the yield on the benchmark 2026 paper falling 3 basis points to 8.405 percent.
Stocks were set to open flat at 0700 GMT, with the JSE securities exchange’s Top-40 futures index unchanged.