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South African rand steady despite hawkish Fed signals

By Reuters News

JOHANNESBURG, Nov 11 (Reuters) - The South African rand was steady in early trade on Wednesday, despite a stronger dollar supported by a hotter-than-expected US inflation report and hawkish comments from Federal Reserve officials that fuelled bets the US central bank will raise rates next month.

  • At 0618 GMT, the rand traded at 16.5325 against the dollar , unchanged from its previous close

  • The US dollar index , which measures the greenback's strength against a basket of six currencies, was 0.1% higher at 102.33

  • "Cheaper oil helps the rand, as does any chance that the Fed hikes less than feared. The inflation debate at the Fed will keep driving the rand until the December 9 meeting," said Wichard Cilliers, head of market risk at TreasuryONE

  • The odds of a half-percentage-point Fed rate hike next month surged on Tuesday after data showed US inflation rose more than expected in October and policymakers signalled a willingness to tighten policy more aggressively

  • Traders now see a 100% probability of a rate increase in December, up from 84% prior to the data, according to the CME's FedWatch tool

  • Like other risk-sensitive currencies, the rand often takes its cues from global factors, particularly US monetary policy

  • South Africa's benchmark 2035 government bond was steady in early deals, with the yield at 8.365%

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