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S.Africa's rand steady as investors eye Fed, stocks lifted by trade deal optimism

Credit: REUTERS/THOMAS WHITE

South Africa's rand firmed within its recent trading range on Tuesday, as investors awaited a potential breakthrough in U.S.-China trade talks and the release of minutes of the most recent Federal Reserve meeting.

Adds latest prices, analyst comments

JOHANNESBURG, Nov 19 (Reuters) - South Africa's rand firmed within its recent trading range on Tuesday, as investors awaited a potential breakthrough in U.S.-China trade talks and the release of minutes of the most recent Federal Reserve meeting.

At 1530 GMT, the rand ZAR=D3 was 0.2% stronger at 14.7800 per dollar compared with an overnight close of 14.8140.

The probability of a deal between Washington and Beijing receded a touch after a report on Monday that Chinese officials were feeling pessimistic about the negotiations, but some cause for optimism was gleaned by markets from a temporary reprieve in sanctions on China's Huawei Technologies.

The dollar subsequently took a knock, allowing emerging market currencies such as the rand to gain ground, although on a weekly basis the currency remains around the same levels.

"No significant change, with prices extending consolidation above the 14.6592 weekly low of 7 November. Daily studies are mixed/bearish, highlighting a cautious tone and extended range trade," said market analyst at Continuum Economics Mike Macdonald.

The release of minutes from the latest U.S. central bank meeting later in the session are expected to support the rand, as investors bet on the bank striking a cautious tone after cutting interest rates three times this year.

The currency hardly reacted to the appointment of a new chief executive at ailing local power utility Eskom late on Monday.

Andre de Ruyter, former Nampak and Sasol CEO, begins the mammoth task of restructuring the heavily indebted utility whose power plants face a struggle to keep the nation's lights on in January 2020.

Bonds were firmer, with the yield on the 2026 debt ZAR186= down 3.5 basis points to 8.37%.

On the bourse, stocks climbed as optimism that Washington and Beijing would agree on a trade deal renewed investor appetite for riskier assets, sending Wall Street to record highs.

The benchmark JSE Top-40 Index .JTOPI was up 1.73% to 51,060.30 points, while the broader All-Share Index .JALSH was up 1.6% to 57,372.55 points.

"I think (there is) renewed optimism that there will be a trade deal done. So I think [investors] are buying under the euphoria that that will go through without any problems," said BP Bernstein trader Vasili Girasis.

Blue-chip heavyweight tech company Naspers NPNJn.J climbed to the top of the bourses, closing 4.08% higher at 2,248.02 rand.

Financial firm Investec PLC INPJ.J rose 2.3% to 84.03 rand after announcing that the demerger from London-listed company Investec Asset Management was on track to complete in the first quarter of 2020.

(Reporting by Mfuneko Toyana and Naledi Mashishi; Editing by Mark Potter)

((mfuneko.toyana@thomsonreuters.com; +27117753153; Reuters Messaging: mfuneko.toyana.thomsonreuters.com@reuters.net))

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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