South Africa's rand firms as traders eye U.S. data

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South African bank notes featuring images of former South African President Nelson Mandela (R) are displayed next to the American dollar notes in this photo illustration in Johannesburg August 13 2014. REUTERS/Siphiwe Sibeko

JOHANNESBURG (Reuters) – South Africa’s rand firmed on Friday, with investors awaiting the U.S. payroll report due later in the day for direction in the absence of local catalysts.

At 0640 GMT, the rand traded at 14.9800 against the U.S. dollar, 0.17% firmer than its previous close.

“Today, the focus will be on the U.S. data and, as a result, price action is likely to be cautious ahead of this event and liquidity tested,” Nedbank analysts wrote in a note.

The rand has been supported this week by the global search for yield by investors unsure of the direction of lending rates in developed economies.

“Risk sentiment (in emerging markets) remains cautiously positive on the back of good U.S economic data, hopes of Biden’s stimulus package getting Senate approval, and a positive outlook from the BOE,” said Andre Cilliers, currency risk strategist at TreasuryONE.

Government bonds were firmer in early deals, with the yield on the benchmark instrument due in 2030 down 3.5 basis points to 8.415%.

Reporting by Olivia Kumwenda-Mtambo; Editing by Devika Syamnath