JOHANNESBURG (Reuters) – The South African rand firmed on Wednesday after softer-than-expected U.S. producer prices data cemented expectations that the Federal Reserve will resume cutting interest rates soon.
U.S. producer prices unexpectedly fell in August, pulled down by a decline in the costs of services, Labor Department data showed.
At 1437 GMT, the rand traded at 17.47 against the dollar, roughly 0.5% up on Tuesday’s close.
The dollar was last down 0.2% against a basket of currencies as traders awaited the world’s biggest economy’s consumer price inflation print on Thursday, which could help define the size and scope of interest rate cuts from the Federal Reserve for next week and beyond.
In South Africa, mining, manufacturing and current account data is also due on Thursday.
On the Johannesburg Stock Exchange, the Top-40 index was last up 0.4%.
“Stock markets are still doing well, and investor sentiment remains positive… and as a result, the rand will still perform reasonably well,” said ETM Analytics in a research note.
South Africa’s benchmark 2035 government bond was slightly weaker in early deals, as the yield rose half a basis point to 9.49%.
(Reporting by Sfundo Parakozov and Anathi Madubela; Editing by Frances Kerry and Alex Richardson)
