JOHANNESBURG: South Africa's rand made a modest recovery on Thursday from a fresh five-year low hit overnight but could stumble again if manufacturing data due later in the session disappoints.
The rand was at 10.7400 to the dollar at 0651 GMT, nearly 0.4 percent firmer than Wednesday's close in New York. It hit a trough of 10.7925 overnight after the dollar climbed to a seven-week high against a basket of major currencies on upbeat jobs data.
The numbers showed that US private employers added a bigger-than-expected 238,000 jobs in December, the strongest increase in 13 months.
It came two days before the closely watched nonfarm payroll report, which could determine the pace at which the Federal Reserve scales back its monetary stimulus.
Minutes of the central bank's December policy meeting released on Wednesday indicated that many members of the Federal Open Market Committee wanted to proceed cautiously in trimming asset purchases.
The Fed had decided earlier to cut purchases by $10 billion to $75 billion a month.
"Although we still believe that the risk lies in a softer-than-expected US payroll report on Friday, yesterday's price action serves as a reminder that the rand is unlikely to sustain a recovery so long as US data proves to be encouraging," Absa Capital analysts wrote in a note, adding that the currency was on track to reach its forecast of 11.00 to the dollar.
Locally, November manufacturing data due at 1100 GMT could drag the rand lower if the numbers are softer than expected.
Government bonds were softer in line with the weaker rand. The yield on the 2026 government bond and the 2015 paper each gained 3.5 basis points to 8.29 percent and 6.255 percent respectively.
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