Rand firms as oil wobbles, with all eyes on the US Fed
The rand was slightly firmer on Wednesday morning, with all eyes firmly on the US Federal Reserve policy announcement later in the day.
At 9.30am the rand was 0.72% better against the dollar at R14.2516, 0.48% up against the euro at R16.2383 and 0.57% firmer against the pound at R18.0426. The euro was 0.26% up to the dollar at $1.1395.
The benchmark R186 government 10-year note was last seen at 9.075% from 9.105%.
Consensus is almost unanimous that the Fed will raise rates for the fourth time in four years, with 91 of 92 experts polled by Bloomberg expecting an upper bound rate of 2.5%.
The Fed's outlook will be scrutinised, however, amid concern that there will be a synchronised global economic slowdown in 2019.
With growing fears about the health of the global economy, the markets simply don’t think the US economy can handle higher rates, said London Capital Group head of research Jasper Lawler.
“Traders will be watching for dovish signs, such as the dropping of the phrase 'further gradual rate rises' from the statement and a softening of the dot plot from three hikes to at most two,” he said.
Some support for the rand this week has come from a falling oil price - with Brent crude falling 4% at one point on Tuesday - due to concerns about global growth and rising production in the US.
It was hard for traders to shake off bearishness, as there were some doubts that recent production cuts by oil cartel Opec would be sufficient to balance the market, said Oanda analyst Stephen Innes.