South African Rand Trades Sideways Ahead of Bond Auction
The South African Rand (ZAR) trades sideways against Western currencies- the US dollar, Euro and Sterling on Tuesday ahead of key economic data and a bond auction.
The local unit is trading rangebound at R16.42 to the dollar, R18.77 to the euro and R21.75 to the British pound, First National Bank (FNB) said in a brief on Tuesday.
ZAR stayed steady after closing stronger on Monday as the market anticipates South Africa’s Leading Business Cycle Indicator figure, followed by the 2033, 2039, and 2042 bond auctions at 11:30.
The rand was stronger on Monday, drawing support from a softer global dollar tone, as progress in US-Iran peace talks eased geopolitical risk sentiment. Easing tensions in the Middle East has reduced pressure on energy markets, while precious metals have begun to recover.
The yellow metal was little changed in yesterday’s session but is losing momentum, trading in negative territory amid mounting expectations of a Fed rate hike, which appears to outweigh optimism surrounding US-Iran peace negotiations.
Gold price has declined to $4,138/ounce.
Oil prices steadied following a chunky decline in Monday’s session, amid reports that the US Treasury issued a 60-day sanctions waiver allowing Iran to sell oil in US dollars following productive peace talks in Switzerland. Brent crude oil is trading at ~$77.53/barrel.
South Africa’s government sold 2.55 billion rand, approximately $154.70 million of its 2033, 2039 and 2042 bonds at auction on Tuesday.
The country’s composite leading business cycle indicator fell 1.8% month on month in April, central bank data showed on Tuesday. The indicator collects data on vehicle sales, business confidence, money supply and other factors to gauge the outlook for Africa’s biggest economy.
