Rand holds firm amid cooling US data, Middle East uncertainty

The rand was little changed on Friday as easing United States (US) inflation boosted speculation that ​the Federal Reserve would keep rates on hold, ‌while Middle East tensions supported the dollar.

At 08:18 GMT, the rand traded at 16,18 against the dollar, little changed ​from its previous close of 16,19.

Risk sentiment ​remained fragile after the United States signalled ⁠it could maintain its naval blockade of Iran indefinitely ​and step up economic pressure on Tehran, highlighting the ​risk of a prolonged Middle East conflict.

The South African currency typically gains when risk appetite is strong, but fears that ​the US-Iran standoff could disrupt oil supplies and ​hurt global growth may keep investors cautious.

The dollar remained range-bound ‌after softer-than-expected US producer prices data reduced expectations for a September Fed rate hike.

“The rand is consolidating within a R16.05/R16.25 range with good two-way flows in ​the market.

From ​a technical ⁠perspective, the local currency is looking slightly overbought, and a correction is possible ​in the short term,” said Andre ​Cilliers, ⁠currency strategist at TreasuryONE.

On the Johannesburg Stock Exchange, the Top-40 index was down 0.6% in early trade.

South Africa’s ⁠benchmark ​2035 government bond was slightly ​weaker in early deals, with the yield up 2 basis points ​to 8.435%.