South African rand gains on bets Fed rate cut coming

JOHANNESBURG (Reuters) -The South African rand firmed on Wednesday after subdued U.S. labour data boosted bets that the Federal Reserve was done hiking interest rates and might start easing its monetary policy early next year.

At 1500 GMT, the rand traded at 18.8425 against the dollar, around 0.7% stronger than its previous close.

The dollar was little changed against a basket of global currencies.

Jobs figures out of the U.S. were below market estimates on Tuesday, “raising the prospect of a Fed rate cut in March next year,” said Andre Cilliers, currency strategist at TreasuryONE.

Like other risk-sensitive currencies, the rand often takes cues from global drivers like U.S. monetary policy in the absence of local data points.

The rand breached 19.00 on Tuesday after South Africa’s third-quarter gross domestic product data showed a slightly bigger than expected contraction.

“The local currency will remain susceptible to any stronger moves in the Dollar and will likely trade on the back foot in the short term,” Cilliers added.

Investor focus will turn towards monthly reserves data and third-quarter current account figures due to be published by the South African Reserve Bank on Thursday.

On the Johannesburg Stock Exchange, the blue-chip Top-40 index closed over 0.2% higher.

South Africa’s benchmark 2030 government bond was stronger, the yield down 3 basis points at 9.980%.

(Reporting by Tannur Anders and Bhargav Acharya; Editing by Rashmi Aich and Mark Potter)