South Africa’s rand retreated from its firmest in two weeks on Wednesday after gaining on a narrower current account deficit, as uncertainty over a U.S. interest rate decision weighed.
Yields on government bonds were flat in early trade, with the benchmark paper maturing in 2026 unmoved at 8.5 percent.
On the bourse the blue-chip Top-40 futures index ticked up 0.9 percent, pointing to the local bourse opening 395 points higher.
At 0630 GMT the rand edged 0.1 percent weaker to 13.4800 per dollar, having gained as far as 13.4100 overnight to its firmest since September 3, after central bank data showed the country recorded a trade surplus in Q2, helping narrow the current account shortfall.
Gains however were capped by varying bets on whether the U.S. Federal Reserve would lift interest for the first time in six years when its two-day policy meeting concludes on Thursday.
Some investors are betting that recent volatility in global markets and increasing evidence of slowing growth in China will prompt the Fed to hold fire this month.
“All things being equal the rand may have fared better but unfortunately the timing, with the imminent U.S. rate decision, was not great,” said Warrick Butler, a trader with Standard Bank.
Failing to hold on to gains beyond the 13.4200 technical resistance risked pushing the rand back towards levels between 13.80 and 14.00, Butler said.
The dollar traded on the backfoot overnight but is poised to advance after upbeat consumer spending data kept alive expectations that the Fed would raise interest rates.
Statistics South Africa publishes retail sales figures for July at 1100 GMT, the last set of significant data before an inflation release and the South African Reserve Bank’s decision on rates next week.