JOHANNESBURG, June 4 (Reuters) – South Africa’s rand inched weaker on Friday, remaining on the back foot against a recovering dollar after upbeat U.S. weekly jobs data brought back bets of high lending rates by the Federal Reserve.
At 0650 GMT the rand was 0.06% weaker at 13.6375 per dollar, adding to losses in the previous session after briefly breaking through key technical level to a new 28-month high of 13.4974.
The rand rallied more than 1% this week. The rand has gained close to 9% against the dollar this year so far, making it the best performing currency in 2021 against the dollar.
Combined with bets that the Fed will keep lending rates lower for longer despite signs of the U.S. economy recovering faster than expected, the rand and other risk currencies have benefited form a strong upswing in commodity prices.
But overnight some of that enthusiasm waned, after U.S. private payrolls data delivered a big beat with an increase of 978,000, against forecasts of 650,000, which sent the dollar rallying.
That sets the stage for the much-watched U.S. non-farm payrolls data due later in the session.
“Although the rand and its emerging-market peers have traded resiliently for much of the week thus far, this has been against a backdrop of market concerns regarding possible Fed action, the data yesterday sparking some activity in this regard,” said analysts at Nedbank.
“All eyes will now be on the outcome of the much-anticipated NFP and employment data from the US today; ahead of this event, markets are likely to be cautious as always.”
(Reporting by Mfuneko Toyana; Editing by Rashmi Aich)