JOHANNESBURG (Reuters) - South Africa’s rand was softer against the dollar on Wednesday, following stronger upbeat U.S. data that dimmed the prospects for further easing by the Federal Reserve.
But traders said the rand was likely to remain within a narrow range, as investors stayed cautious about their exposure to riskier emerging market currencies.
The rand was at 7.5653 to the dollar at 0652 GMT, 0.54 percent down from Wednesday’s New York close of 7.529.
“USD/ZAR is being pulled in two directions: the great risk environment versus the stronger U.S. dollar,” said Rand Merchant Bank in a client note.
“Over time we still believe it will be the better risk environment that will come to dominate, but we look set to open the local trading session around the middle of yesterday’s range.” RMB added.
South Africa is due to release January retail sales data at 1100 GMT. Economists have forecast year-on-year growth to have slowed to 7.1 percent from 8.7 percent in the previous month.
Yields on both of South Africa’s main benchmark government bonds were up 2.5 basis points, with the yield on the shorter dated 2015 bond at 6.695 percent and that on the 2026 note at 8.31 percent.
On the bourse, stocks looked set for a higher start, with the March futures contract of the JSE’s blue-chip Top-40 index up 0.52 percent before the 0700 GMT start of trade.