PUBLISHED: Tue, 21 Aug 2018 12:14:27 GMT
JOHANNESBURG (Reuters) – South Africa’s rand firmed more than one percent in early trade on Tuesday, matching gains by its emerging market peers as criticism of Federal Reserve rate hikes by U.S. President Donald Trump hurt the dollar and revived demand for some risk assets.
At 0630 GMT the rand was 1.1 percent firmer at 14.3700 per dollar, its firmest since Thursday, in what traders said was the beginning of a consolidation pattern with momentum indicators showing the unit was oversold.
The rand’s 3-day Relative Strength Index (RSI), used to identify oversold or overbought signals by comparing the current price to previous periods, dipped below the 70-mark overnight indicating a reversal of the recent bear trend.
The rand crashed to a two-year low last week as the financial crisis in Turkey rattled sentiment towards emerging markets broadly, adding to concerns about the impact of the U.S.-China trade spat on global economic growth.
But with Turkish markets closed for a religious holiday and anticipated talks between the United States and China seen lowering the temperature of the dispute, Trump’s central bank comments were the main catalyst.
In an interview with Reuters Trump said he was “not thrilled” with Federal Reserve Chairman Jerome Powell for raising interest rates, causing the greenback to slide to its lowest level since Aug. 9.
Bonds also firmed, with the yield on the benchmark 2026 paper down 3.5 basis points to 9 percent.
Stocks were set to open a touch lower at 0700 GMT, with the Johannesburg Stock Exchange’s Top-40 futures index down 0.1 percent.
Reporting by Mfuneko Toyana; Editing by Ed Stoddard
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