The South African rand was steady against the major currencies in quiet midday trade on Wednesday after it moved above the R6,10 level on Tuesday as the dollar strengthened following the release of United States trade data.
At noon, the rand was quoted at R6,1050 per dollar from an overnight close of R6,1051 and 6,0501 on Monday. It was quoted at R7,5425 to the euro from a previous R7,5313 and at R11,3270 against sterling from a previous R11,3390.
The euro was quoted at $1,2365 from $1,2335 overnight, while gold was quoted at $403,60 an ounce from a previous $402,38/oz.
“We are marking time ahead of the US retail data. The US trade figure yesterday was a good one, and we may have a similar surprise today,” said a currency trader.
The better than expected foreign trade data caused the dollar to strengthen, but the market is positioned today for a worse-than-expected result, which is why the US dollar is weaker than its overnight levels.
A surge in exports in May helped narrow the US trade deficit from record levels in April, the Commerce Department reported, according to AFX. The trade gap narrowed by 4,5% in May to $46-billion.
This is the first narrowing in the trade deficit since last November and the largest since October 2002.
The size of the narrowing of the trade deficit was unexpected. Wall Street economists had forecast that the deficit would fall slightly to $48,1-billion.
The trade gap in April was revised down slightly to $48,1-billion from the initial estimate of $48,3-billion, but this is still the largest monthly trade gap ever recorded.
Traders said the R6,13 level on the topside will be a crucial one for the rand and should it break that, it could quickly run up to R6,20. — I-Net Bridge