South African rand flat after strong US data, election next week

Source: Market Screener

JOHANNESBURG (Reuters) - The South African rand was little changed in early trade on Friday after robust economic data out of the U.S. raised bets that the Federal Reserve might only cut interest rates later this year.

At 0713 GMT, the rand traded at 18.4850 against the dollar, near its previous close of 18.4825.

The dollar last traded around 0.05% weaker against a basket of global currencies.

The rand slipped this week on hints that interest rates could remain higher for longer in the world's biggest economy, while strong economic data out of the U.S. has boosted beliefs that cuts might only come at the end of the year.

"Another round of robust US economic and labor market data has seen markets now pricing in the first Fed rate cut as likely to only be in December," said Andre Cilliers, currency strategist at TreasuryONE.

"There is a general risk-off sentiment across all markets."

South Africans will next week vote in an election where polls suggest the ruling African National Congress could lose its legislative majority for the first times since coming to power 30 years ago.

"The rand is likely to remain on the back foot in the short term as traders turn cautious and we see further consolidation ahead of next week's elections," Cilliers said.

On the Johannesburg Stock Exchange, the blue-chip Top-40 was down around 0.4% in early trade.

South Africa's benchmark 2030 government bond was weaker in early deals, with the yield up 5.2 basis points to 10.482%.

(Reporting by Tannur Anders; Editing by Bate Felix)