Rand under pressure, focus on CPI data

Johannesburg - The rand weakened near a four-year low against the dollar early on Wednesday, stung by concerns about labour unrest, but market players said it was unlikely to fall much further while investors awaited domestic inflation data.

The rand fell 0.4% to R9.5900 early in the session. It hit a four-year low of R9.61 on Tuesday, dragged down by worries about labour tension in the mining industry and a firm dollar.

Dealers expect a rebound from the sharp fall of the past 9 sessions, with the R9.61 level seen as resistance for dollar bulls.

"The upside momentum could start to stall around these levels. Failure to break above the prior high of R9.6100 seen yesterday could see the dollar/rand top out," Tradition Analytics told investors in a morning note.

"Those trading off a long dollar base should proceed with caution and even consider trimming some of their long dollar positions."

Consumer price inflation numbers for April are due at 10:00. The data will be keenly watched as it comes a day before the central bank announces a decision on monetary policy after three days of deliberations.

Economists expect inflation to brake to 5.8% year-on-year in April, from 5.9% in March.

Government bond yields dropped 3.5 basis points to 5.16% on the 2015 note and 3 basis points to 7.02% on the 2026 issue.

Source: www.fin24.com

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