Rand range bound in early trade

The rand was range bound in early trade on Wednesday after failing to break below the 7.24 level on the downside on Tuesday. Traders are eyeing local retail trade sales data later in the day.

At 8.35am local time the rand was bid at R7.27 to the dollar, R9.33 to the euro and R11.28 to the pound. The euro was bid at $1.2838 from $1.2877 overnight.

RMB analysts said in their morning report the rand failed to break 7.24 on Tuesday and seems to have lost its natural impetus to go lower. "This comes despite reports of exceptional foreign interest at yesterday's government bond auction. Interestingly there was only a small hint of trade suggesting some concern over the political situation. Most of all the failure at 7.24 mapped with EUR/USD's similar inability to break 1.29," they said.

This leaves the USD/ZAR range-bound at 7.24-7.32 and with the international data and event calendar almost completely empty right through the end of the week we might well remain trapped in this narrow band, they added.

Local retail sales at 11:30 will be watched. South African retail trade sales at constant (2008) prices for June are expected to increase to 7.4% year-on-year (y/y) from 4.6% in May, according to a survey of leading economists by I-Net Bridge.

Economists say the lagged benefits of lower interest rates are filtering through into boosting consumer spending as households find that their financial position has improved, though the World Cup has been a major factor behind the recent increases and the levels of growth may not last.