* Rand rally loses steam, resistance at 8.30
* Bonds gain as data supports domestic rate cut
JOHANNESBURG, June 7 (Reuters) – Africa’s rand climbed as
much as 1.2 percent against the dollar on Thursday before giving
up all the gains in see-saw trading as dented prospects of
policy easing in the U.S. negated the lift that China’s rate cut
had given commodity currencies.
Government bonds edged higher after weak manufacturing and
mining data pointed to sluggish domestic growth, supporting the
case for an interest rate cut later this year.
The rand peaked at 8.2215 to the greenback, the
strongest it has been since May 22, tracking a global rally in
commodity currencies after China’s central bank cut benchmark
rates to support growth in the country, a key importer of South
African minerals.
But the rand, buffeted to three-year lows last week as
worries about the liquidity crunch in the euro zone dented
global risk appetite, ran out of steam in late Thursday trade,
falling back to 8.3220 by 1559 GMT compared with Wednesday’s
close at 8.32.
“Strong support at 8.3000 limited dollar/rand downside in
the morning session, but this gave way after the China easing
gave a kick to risk appetite,” said Christopher Shiells,
emerging markets analyst at Informa Global Markets.
“However, the rally was halted as Bernanke disappointed
markets by not strongly signalling QE3, though I think
expectations had been built up too much.”
Markets were left somewhat deflated after Federal Reserve
Chairman Ben Bernanke said the U.S. central bank was ready to
shield the economy but offered few hints of stimulus by way of
further quantitative easing.
South African government bonds closed firmer on the day, and
yields fell, as weaker than expected factory data led some
market players to price in lower domestic rates later this year.
The yields on the benchmark three-year and 14-year
bonds each shed three basis points to 6.24 percent and
8.26 percent respectively.
(Reporting by Stella Mapenzauswa; Editing by Toby Chopra)
