* Rand support seen at 8.35 per dollar
* Lower manufacturing output expected
JOHANNESBURG, July 12 (Reuters) – South Africa’s rand
weakened against the dollar on Thursday, in line with other
commodity currencies, after the U.S. Federal Reserve
disappointed investors hoping for more bond-buying to revive the
world’s biggest economy.
The rand dropped 1.1 percent to 8.3177 against the
greenback at 0647 GMT from last night’s New York close of
8.2250.
“The euro is a little bit lower, commodity currencies are
under pressure on bad Australian employment data put out while
we were sleeping,” said Jim Bryson, a trader at Rand Merchant
Bank.
The dollar gained overnight after minutes from last month’s
Federal Reserve meeting showed additional asset-buying by the
Fed was not imminent and likely to occur only if U.S. economic
conditions worsened.
The overall damp sentiment was exacerbated by a surprise
drop in Australian employment in June which put commodity
currencies such as the rand even further on the back foot.
However, foreign appetite for South African bonds remains at
record levels, with the yield on three-year paper dropping 3.5
basis points to another new low of 5.85 percent while that on
the longer-dated 14-year paper fell 6.5 basis points
to 7.685 percent.
South Africa is due to release manufacturing output data for
May at 1100 GMT. Ten economists surveyed by Reuters expect
factory output to growth to slow at 1.0 percent on an annual
basis from 1.2 percent in April.
The brake in manufacturing output is likely to back the case
for an interest rate cut in Africa’s biggest economy, further
increasing foreign demand for local bonds ahead of the country’s
inclusion to Citi’s World Government Bond Index in October.
(Reporting by Vuyani Ndaba; Editing by Ed Cropley)
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