Following a weaker start against major global currencies‚ the rand pared losses on Wednesday afternoon to trade flat against the greenback‚ after US data failed to indicate increased inflationary pressure.
Producer inflation‚ measured by the annual change in the producer price index‚ fell to 2.6% in April. A Trading Economics consensus was for 2.2%.
The data release comes ahead of the publication of US consumer inflation data for the same month on Thursday‚ which will likewise be closely watched as the market seeks to gauge the pace of interest-rate increases by the US Federal Reserve.
On Wednesday‚ markets kept a close eye on the dollar and the oil price‚ with both rising after the White House decided to withdraw from a 2015 nuclear deal with Iran.
This withdrawal is expected to put pressure on Iranian oil supplies‚ with the price of Brent crude earlier rising above $77 for the first time since late 2014‚ before pulling back a little.
The withdrawal was widely expected by the market‚ but what should have a lasting effect would be the threat to penalise those who assisted Iran‚ said FXTM research analyst Lukman Otunuga.
On Wednesday the yield on the benchmark US 10-year paper once again touched the symbolic 3% mark.
Local news was also somewhat downbeat‚ with the South African Chamber of Commerce and Industry saying earlier that its business confidence index declined 1.6 points to 96 in April.
At 3pm‚ the rand was at R12.5644 to the dollar from R12.5718‚ R14.933 to the euro from R14.9139 and at R17.0816 to the pound from R17.0311.
The euro was at $1.1885‚ from $1.1864.
By: Karl Gernetzky – BusinessLIVE
Source: TMG Digital.