South African Rand Starts Week Stronger Following U.S. Jobs Report

At mid afternoon, the rand traded at 14.2350 against the dollar, around 0.7% firmer than its previous close.

The rand rallied on Friday after the U.S. jobs report came in below market expectations, as the Fed has made a labour market recovery a condition for paring back its pandemic-era asset purchases.

Along with other risk-sensitive currencies, the rand moves regularly on shifts in the outlook for U.S. monetary policy.

“September is typically a period for global financial markets where risk-off can subside, and while some churn is evident, risk-taking can start to pick up, and further dovish comments from the Fed would support this,” Investec chief economist Annabel Bishop said.

This week’s economic data releases include South Africa’s second-quarter gross domestic product (GDP) figures on Tuesday, as well as July manufacturing and second-quarter current account numbers on Thursday.

Analysts polled by Reuters predict that GDP expanded 0.7% quarter on quarter, seasonally adjusted but not annualised, in the April-June quarter – down from 1.1% in the prior three-month period.

That reflects expectations for a sluggish economic recovery from the COVID-19 pandemic.

The yield on the government’s benchmark 2030 bond was flat at 8.810%.

In the equities market, stocks declined, led by retail group Steinhoff after a court judge ruled that it has jurisdiction to hear a liquidation bid against the retailer. The proceedings will now continue from later this week.

The news overshadowed positive developments regarding its lawsuit settlement proposal, which was approved by majority creditors and claimants on Monday, moving the group closer to finalising a deal that has been a major headache since the company’s restructuring.

Steinhoff shares closed 21.62% weaker at 2.90 rand.

Overall, the Johannesburg All-Share index fell 0.18% to 66,253 points while the Top-40 index declined 0.12%.

Mining stocks were also in the red, with the mining index down 3.57% on weaker commodity prices.

For a look at all of today’s economic events, check out our economic calendar.

(Reporting by Alexander Winning and Nqobile Dludla, Editing by Timothy Heritage and Jan Harvey)