* Rand retreats from 13-week high
* Correcting from overbought levels
JOHANNESBURG Aug 13 (Reuters) – The rand dropped more than
1 percent against the dollar on Monday during thin trade, in
what analysts said was probably a technical correction after the
currency approached a key resistance level late last week.
A dip in commodity prices prompted selling in the rand.
Dealers said data showing the European Central Bank had not
bought any bonds last week under its bond-purchasing programme
added to the rand’s weakness as concern about the euro zone’s
lack of action to tackle its debt crisis continues to weigh on
riskier emerging market currencies.
“They are staying clear of those markets so that adds a
slight risk-off flavour to global markets today,” said ETM’s
McCalgan.
The rand fell 1.1 percent against the dollar to a
session low of 8.16 in late afternoon trade.
“We’ve seen the rand in a technically overbought position
against the dollar for about the past week. From that
perspective, it’s been due for a slight bounce,” said Sean
McCalgan, a market analyst at ETM.
The rand rallied to close at 8.0710 in New York on Friday.
The market is watching for a break through 8.06/05 resistance to
confirm a strengthening trend through to 8 rand levels.
Technical analysts say they are watching the 8.05 and 8.20
barriers to set clear direction on the dollar/rand. The rand
previously tried and failed at the 8.07/06 level in early July.
Local dealers said Monday’s moves were probably exaggerated
by thin volumes with many players in northern hemisphere markets
away for summer holidays.
Yields on government bonds rose 3.5 basis points on the 2015
paper to 5.67 percent, a near one-month high. The
14-year issue climbed 4 basis points to 7.45 percent.
(Reporting by Xola Potelwa; Editing by Susan Fenton)
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