Rand dips slightly as positive US economic data boosts dollar

Cape Town - The rand stood firm, dipping slightly on Friday afternoon in the wake of the release of better-than-expected US economic data. 

The local currency briefly weakened from R12.65/$ to R12.73/$ after data from the US Bureau of Labor Statistics showed gains of 223 000 non-farm jobs for May, above forecasts of 190 000.

The rand was trading at R12.69 to the greenback at 15:00.

While the rand fell in the wake of the release of the US data, it was still trading even for the day in the early afternoon. It had opened trade at R12.69/$, and initially strengthened before weakening. 

The dollar index, which tracks the dollar's relative strength against a basket of currencies, was up 0.26% at 14:55, at 94.24. 

"[The dollar] is firmly on the front foot," said TreasuryONE in a snap note. The US unemployment rate dropped to 3.8%, while increases in average US hourly earnings also beat expectations. 

As Bloomberg reported, this matched the lowest unemployment rate in almost five decades, indicating the strong labour market will keep powering economic growth.

The numbers reinforce expectations for Fed policy makers to raise interest rates when they meet on June 12-13, and may spur bets on two more hikes this year after that, rather than one, noted Bloomberg

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