* But the currency should weaken later this week
* Central bank sentiment indicator due at 0700 GMT
* Weekly government debt auction at 0900 GMT
JOHANNESBURG, July 24 (Reuters) – The rand firmed against
the dollar on Tuesday, tracking global markets that were cheered
by signs of improvement in Chinese manufacturing data, while
government bonds improved from weaker levels from the previous
session.
The South African currency was up 0.4 percent to
the dollar at 8.4283 by 0606 GMT, after hitting a near one month
low on Monday as investors globally sought cover in safe haven
assets from Spain’s debt troubles.
It closed at 8.4630 in Monday’s session and dealers are
looking for the rand to test the 8.50 level later this week as
the recovery may be short-lived.
Risk appetite returned on Tuesday with China’s PMI at its
highest level in five months, but still looking shaky below the
key 50 level on the index, with the market looking for any good
news to hold onto.
“Usually when we have such a vicious move on one day the
market does not have the momentum to carry it further the next,”
said Warrick Butler, Standard Bank’s rand trader.
“We have had two days, Friday and Monday, in a ‘risk off’
environment and so my feeling is we will either have a day of
consolidation or a bit of profit-taking after such an extensive
move.”
Continued…
