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South Africa's rand firms to 3-month high, stocks down

JOHANNESBURG (Reuters) – South Africa’s rand rose against the dollar on Thursday to hit its strongest in nearly three months, tracking fellow emerging market currencies, as the dollar was dented by hopes of U.S. interest rate cuts.

People chat in front of a reception with an electronic board displaying movements in major indices at the Johannesburg Stock Exchange building in Sandton Johannesburg, file. REUTERS/Siphiwe Sibeko

Stocks were down after the U.S national holiday reduced volumes in local equities, and the stronger currency curbed appetite for local commodities.

At 1510 GMT the rand was 0.2% firmer at 14.0375 per dollar. It hit a session high of 13.9575, its strongest level since April 17.

Fuelling interest in riskier assets was a slew of soft U.S. data on Wednesday that added to bets the Federal Reserve will cut rates as early as July. Expectations that nominated European Central Bank chief Christine Lagarde will keep to a dovish policy path also helped send the dollar down.[EMRG/FRX]

U.S. non-farm payrolls data due on Friday is set to give another indication of whether the Federal Reserve could cut rates, and in lieu of any major local data releases provides the main focus for investors.

“Market trading activity has been exceptionally subdued over the most recent sessions, with the markets trading with little conviction and maximum caution, with U.S. NFP data scheduled for release on Friday,” analysts at Nedbank said.

“The market expects these data releases to provide the backdrop for the Fed’s tone going forward,” Nedbank said in a note.

On the stock exchange, the benchmark JSE Top-40 Index was down 0.41% to 51,747 points, while the broader All-Share Index dropped 0.34% to 57,816 points.

“Because of the American holiday today, [U.S] markets are not open so we’ve got very little volume going through. The stronger rand is also pushing the resources down,” said PSG Securities Portfolio Manager Rigardt Maartens.

Among the fallers were platinum miners, down 1.75% as a group, with Anglo American Platinum down 1.98% to 805.48 rand and Impala Platinum down 0.79% to 73.21 rand.

In fixed income, the yield on the benchmark government paper due in 2026 was down 3.5 basis points at 8.075%.

Reporting by Olivia Kumwenda-Mtambo; Editing by Hugh Lawson

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