The South African rand regained lost ground on Friday against the U.S. dollar while global focus remained on conflict in the Middle East.
At 1505 GMT, the rand traded at 18.9350 against the dollar, over 0.5% weaker than its previous close. The rand had weakened in the past couple of days on soaring U.S. Treasury yields and a sharp spike in local inflation. The dollar last traded around 0.07% weaker against a basket of global currencies. “Global markets are volatile, which creates risks of spillover, but overall, the rand seems unlikely to go very far in either direction,” analysts at Rand Merchant Bank said in a note earlier.
Adam Button, chief currency analyst at ForexLive, said that the potential for MOF intervention was limiting dollar gains. “I think the dollar would otherwise be stronger if not for the threat of intervention from Japanese monetary officials,” he said. “Given fixed income and equities, the dollar should be stronger than it is this week, and I think it’s just a matter of time until it materializes.
Reuters: The pound was at its weakest against the euro in five months on Friday and was also under pressure versus the dollar as weak retail sales data reinforced fears about the health of the British economy. The euro climbed as far as 87.40 pence, its highest since May, with the European common currency also set for its best week against the pound in a month.
The European Central Bank and Bank of Canada also hold policy meetings and, while no hikes are expected, investors will be sensitive to guidance on futures moves. The recent surge in bond yields has tightened monetary conditions without the central banks having to do anything, allowing the Federal Reserve to signal it will likely stay on hold at its policy meeting next week.
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