Johannesburg - South Africa's rand was stable against the dollar early on Tuesday and was expected trade in a narrow range for most of the session given a dearth of market moving data.
Government bonds extended recent gains, pushing yields to their highest in nearly 2 weeks, in line with US Treasuries after higher than expected factory data stoked rate hike expectations in the world's largest economy.
By 06h40 GMT the rand traded at 12.0500 against the greenback, barely changed from Monday's close at 12.0605.
“The rand will continue trading in a narrow range as participants wait on the sidelines ahead of the Germany factory order release on Thursday and the all-important US employment report on Friday,” Barclays Africa said in a note.
In fixed income, government debt maturing in 2026, the benchmark for the market, was yielding 4 basis points higher at 8.095 percent compared to where it ended the previous session.
“A move above 8.13 percent could cause another bout of price weakness and the medium term objective of 8.5 percent could become a reality sooner rather than later,” Standard Bank trader Warrick Butler said.
Traders and analysts said Reserve Bank Governor Lesetja Kganyago's speech later in the morning could give some clues on the outlook for South African interest rates.
The bank's monetary policy committee will hold its third policy meeting of the year later this month.
Reuters