Rand firmer as bulls wrestle bears ahead of G20
The rand advanced for a third straight session early on Friday, as easing trade tensions between Washington and Beijing supported risk buying going into the eagerly awaited G20 summit.
JOHANNESBURG - The rand advanced for a third straight session early on Friday, as easing trade tensions between Washington and Beijing supported risk buying going into the eagerly awaited G20 summit.
At 0645 GMT, the rand was 0.28% firmer at R14.1300, its strongest level since 22 April, bringing gains for this month to nearly 3%.
More than half of those gains came this week during an extended rally in some emerging market currencies after the US Federal Reserve last week reversed its hawkish stance on lending rates, knocking the greenback to a three-month low against the euro, while boosting the hunt for yield.
Hopes that the United States and China will agree a truce in their tariff war when their leaders meet at the G20 summit in Japan this weekend added to demand for risk currencies, with the rand’s domestic difficulties taking a backseat.
But some traders and technical analysts fear the rand’s rally may be a false move before it retreats - a so-called bear trap.
“For those that think this may be a bear trap again, and it could be a possibility, a daily close above yesterday’s open at R14.2275 and a move through yesterday’s highs will indicate a possible reversal,” said senior trader at Standard Bank Oliver Alwar.
The first obstacle for the rand comes in the form of May trade data due at 1200 GMT, with another deficit after April’s R3.43 billion ($243 million) shortfall likely to spur some selling.
Bonds were flat, with the benchmark 10-year government paper trading at 8.115%.