Positive China data lifts South African rand ahead of Moody's review
JOHANNESBURG, Nov 1 - South Africa's rand firmed on Friday as an unexpected bounce in Chinese factory activity helped offset concerns over prospects of a U.S.-China trade pact and skittishness ahead of a long-awaited decision on South Africa's credit rating.
* The rand ZAR=D3 traded at 15.0600 versus the greenback by 0505 GMT, 0.31% stronger compared with the previous day's close.
* The currency had been losing ground following a bleak budget speech on Wednesday, where Finance Minister Tito Mboweni slashed growth forecasts and predicted ballooning debt.
* That raised fears that South Africa could lose its last investment-grade credit rating on Friday, when Moody's is set to announce its ratings decision following a review, also knocking confidence in the rand.
* However, investor sentiment was given a boost on Friday after a survey showed that manufacturing activity in China expanded at its fastest pace in more than two years in October, lifting Asian shares.
* Throughout the day, though, the rand is likely to be driven by Moody's decision. Peregrine Treasury Solutions said in a note there was no telling the impact a negative adjustment in its rating could have: "For now, it's just sit back and hold tight, with a new support level of R15.00 having been set."
* Government bonds inched lower, with the yield on benchmark 2026 instrument rising 1 basis point to 8.505%. ZAR186=
(Reporting by Emma Rumney; Editing by Aditya Soni)