JOHANNESBURG (Reuters) – South Africa’s rand strengthened early on Tuesday, ahead of local manufacturing data that could provide more clues about the health of the economy.
At 0619 GMT, the rand traded at 18.7225 against the dollar, around 0.3% stronger than its previous close.
The dollar index was last down about 0.2% against a basket of currencies, hovering near a two-month low as traders pared back expectations on the Federal Reserve’s interest rate hike trajectory.
Investors globally will be looking at a U.S. inflation reading on Wednesday after Fed officials signalled on Monday that the central bank was nearing the end of its interest rate hike cycle.
Statistics South Africa will release May manufacturing output numbers at 1100 GMT, followed by mining figures on Thursday.
“Expectations are for a further weakening in the y/y growth rate in May, and this trend is likely to remain in place even with better load-shedding (power cut) conditions in June and July,” ETM Analytics said in a research note.
With a limited number of domestic drivers this week, the rand is likely to take its lead from global factors like the outlook for U.S. monetary policy and moves in the dollar.
South Africa’s benchmark 2030 government bond was also stronger in early deals, the yield down 2.5 basis points to 10.780%.
(Reporting by Bhargav Acharya; Editing by Alexander Winning)
