South African assets gain on U.S. rate cut bets
Recasts throughout, adds analyst comments in paragraphs 5-6, 9
JOHANNESBURG, July 3 (Reuters) -South African assets gained on Wednesday, lifted by optimism over comments by the Federal Reserve chair that reinforced expectations that U.S. interest rate cuts were not far off.
At 1610 GMT, the rand traded at 18.40 against the dollar ZAR=D3, over 1% stronger than its previous close. The dollar =USD last traded more than 0.4% weaker against a basket of currencies.
Speaking at a monetary policy conference on Tuesday, Fed Chair Jerome Powell said the U.S. was back on a "disinflationary path," although he cautioned that policymakers needed more data before they could consider cutting rates.
The risk-sensitive rand often takes its cue from global drivers like U.S. monetary policy.
The South African currency traded turbulently earlier this week on corporate sale-related flows out of the country, said Danny Greeff, co-head of Africa at ETM Analytics, without naming the sale.
"With that now seemingly completed, there is scope for the rand to recover meaningfully through the second half of the week. However, that would require the dollar to play ball," he added.
On Wednesday, the new ministers in President Cyril Ramaphosa's coalition government were sworn in.
Investors are looking for signs the government will prioritise reforms after years of sluggish growth in Africa's most industrialised economy.
"Of course, further out, the focus is on the local reform outlook. Investors want to see clear signs of relative political stability and reform progress through the months ahead for any would-be rand rally to have legs," Greeff said.
On the Johannesburg Stock Exchange, the Top-40 .JTOPI index closed more than 1.5% higher. South Africa's benchmark 2030 government bond ZAR2030= was also stronger, as the yield fell 13.5 basis points to 9.815%.
Reporting by Tannur Anders and Bhargav Acharya; Editing by Alexander Winning and Jonathan Oatis
Related Assets
Latest News
Disclaimer: The XM Group entities provide execution-only service and access to our Online Trading Facility, permitting a person to view and/or use the content available on or via the website, is not intended to change or expand on this, nor does it change or expand on this. Such access and use are always subject to: (i) Terms and Conditions; (ii) Risk Warnings; and (iii) Full Disclaimer. Such content is therefore provided as no more than general information. Particularly, please be aware that the contents of our Online Trading Facility are neither a solicitation, nor an offer to enter any transactions on the financial markets. Trading on any financial market involves a significant level of risk to your capital.
All material published on our Online Trading Facility is intended for educational/informational purposes only, and does not contain – nor should it be considered as containing – financial, investment tax or trading advice and recommendations; or a record of our trading prices; or an offer of, or solicitation for, a transaction in any financial instruments; or unsolicited financial promotions to you.
Any third-party content, as well as content prepared by XM, such as: opinions, news, research, analyses, prices and other information or links to third-party sites contained on this website are provided on an “as-is” basis, as general market commentary, and do not constitute investment advice. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, it would be considered as marketing communication under the relevant laws and regulations. Please ensure that you have read and understood our Notification on Non-Independent Investment. Research and Risk Warning concerning the foregoing information, which can be accessed here.
