NEWS

Rand loses momentum

Johannesburg - The rand softened against the dollar on Tuesday and was seen coming under pressure as investors steered clear of risky assets, disappointed by comments that European leaders are unlikely to come up with a quick solution to the debt crisis.

The rand's failed attempt at breaking resistance at R7.80 on Monday suggests it has lost momentum for further gains in the short term.

Global stock markets fell as uncertain investors opted to play it safe and the domestic bourse looked set to follow suit.

The JSE's Top 40 - (Tradeable) [JSE:J200] contract was down 0.64%, pointing to a lower start at 07:00 GMT.

The rand was trading at R8.0150 against the dollar at 06:50 GMT, 0.3% weaker than Monday's New York close of R7.9904.

"Lower global stocks are normally a signal that the rand will come under pressure," said Jim Bryson, dealer at Rand Merchant Bank.

"Through R8.00 you can expect it to go to R8.10, but only above R8.10 does it really start to look wobbly. This week is going to be volatile and headline driven," he said, adding investors were shunning risk until they see what Europeans will decide.

South African government bonds were also weaker ahead of a government auction whose results will be out after 09:00 GMT.

The yield on the 2015 bond was up five basis points to 6.78% and that on the 2026 issue went up 5.5 basis points to 8.475%.

Focus will turn to inflation and retail sales data on Wednesday.

The market is expecting inflation to rise to 5.6% year-on-year in September and a higher than expected outcome would weigh on bonds as it would dim lingering hopes of another rate cut in Africa's largest economy.

 

Source: www.fin24.com

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