Rand steady after brief Sino-US trade scare
An overnight statements from the Trump administration that the trade deal with China was still on track lifted risk appetite roiled by simmering tensions between the two superpowers that has soured in recent months.
JOHANNESBURG - The rand edged up on Tuesday amid a global recovery of risk-sensitive currencies after US President Donald Trump said the US-China trade pact was “fully intact”, clarifying earlier confusing statements from the White House about the deal.
At 0600 GMT, the rand was 0.27% firmer at R17.2975 per dollar closed at R17.3450 in New York. In the previous session, the local unit was weighed down by investor fears about a second wave of COVID-19 infections globally as cases in the United States and Brazil spiked.
However, overnight statements from the Trump administration that the trade deal with China was still on track lifted risk appetite roiled by simmering tensions between the two superpowers that has soured in recent months.
Local traders, however, expect the positive sentiment towards the rand to be short-lived, with unemployment figures due later in the day and ahead of the emergency budget meeting.
A Reuters poll taken over the past week showed economists expect the government budget deficit for 2020 to widen to a record 14% of gross domestic product, from an official estimate of 6.3% of GDP in the last financial year.
Growth forecasts are equally bleak, predicting a 6.5% contraction to GDP.
Unemployment figures for the first quarter, due at 0930 GMT on Tuesday, are set to edge up to 29.7% of the population from 29.1% in Q4.
“The data will reflect the unemployment problem South Africa was facing even before the ongoing crisis,” market economists at ETM Analytics said in a note.
“Notwithstanding the domestic data, it is unlikely the ZAR-leg of the USD-ZAR drives the pair ahead of tomorrow’s budget presentations, as was the case yesterday.”
Bonds were weaker in early trade, with the yield on the 2030 government issue up 1 basis point at 9.29%.