The rand was range bound in midday trade on Friday, with investors in the forex markets not keen to take new positions ahead of the US jobs report later in the session.
PSG Prime FX sales trader Lynden Reabow said that if the US nonfarm payroll data for April came out bullish, this could encourage risk-on environment which was rand positive. However, if it was bearish, this could strengthen the US dollar.
“The European Central Bank president gave us little guidance on Wednesday, with US ADP numbers not giving us any comfort because they were negative,” he said.
At 11:03 local time the rand was bid at R7.7355 to the dollar from its previous close of R7.7218. It was bid at R10.1583 to the euro from R10.1573 before, and at R12.4979 against sterling from R12.4999 previously.
The euro was bid at US$1.3132, from its previous close of $1.3148.
Standard Bank said in its morning report that the rand was running out of momentum.
“Markets will look to today's non-farm payrolls data for direction but, with the ADP report released earlier this week having disappointed, today's data could prove similarly so. While such an outcome would weigh on the dollar today, the weekend elections in France and Greece will be closely eyed over concerns of new governments backpedalling on the required fiscal reforms. While the rand continues to be well supported by non-resident inflows into the bond market, we expect the currency to continue taking its cue largely from developments in the eurozone and, with the euro's rally likely to be short-lived, there could be further weakness in store for the rand,” the bank said.
“A number north of 200,000... US payrolls lottery could take some belief out of the QE3 trade, pushing the euro/dollar (pair) back below 1.31,” said IG Markets strategist Justin Harper, Dow Jones Newswires reported.
The market is now likely positioned for a number just north of 100,000, Harper added. A print below that mark could spur euro buying. European elections slated for the weekend that have the potential to shake currencies out of recent ranges, kept players on the sidelines Friday as major currencies traded sideways. - I-Net Bridge