South African rand flat as traders await more US inflation data

JOHANNESBURG: The South African rand was flat in early trade on Wednesday, as markets awaited a US ​producer inflation reading for further clues on the ‌Federal Reserve’s interest rate trajectory. At 0721 GMT the rand traded at 16. 3850 against the U. S. dollar, little moved from its ​previous close. ETM Analytics in a research note said ​broad dollar weakness rather than improving domestic fundamentals ⁠has driven rand resilience. Africa’s largest economy posted its first ​decline in mining output in six months, with production down 5. 4% ​in May versus the same month a year prior after rising 8% in April. The domestic economic calendar is relatively light for ​the remainder of the week, leaving the risk-sensitive rand ​largely influenced by external factors, such as U. S. policy and data ‌releases. The ⁠dollar traded weaker against a basket of peers, tumbling from a two-week high, as a softer-than-expected consumer price index reading on Tuesday curbed bets on a near-term Fed ​hike. Attention shifts to ​the Producer ⁠Price Index, due later in the global day. Traders see about a 58% chance of ​a rate hike at the Fed’s September ​meeting, versus ⁠76% before the CPI report, and continue to price in an 80% chance of a December hike, CME FedWatch ⁠Tool’s ​data showed. South Africa’s benchmark 2035 ​government bond weakened in early deals, with the yield rising 2. 5 basis ​points to 8. 425%.

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