USD/ZAR: Rand lingers near 1-month low on Fed rate prospects ahead of NFP

Key points

The South African Rand remained pressured near recent one-month low against the US Dollar on Friday amid risk-off market mood.

Yesterday the Rand plummeted 1.8% after the minutes of the Federal Reserve’s June meeting showed that some FOMC members voted in favor of raising interest rates by 25 basis points.

The minutes also revealed that almost all FOMC members saw the need for more rate increases this year.

The rather hawkish stance urged investors to move into safe haven assets such as the US Dollar and the Yen.

The latest US private payrolls data also added to the case for further policy tightening, with US economy creating 497,000 job positions in June, or the most since February 2022.

“The unexpected jump in payrolls has dampened market sentiment as a ‘hot’ jobs market may provide further motivation for the US Federal Reserve to continue its rate hike path,” First National Bank analysts wrote in an investor note, cited by Reuters.

Investor focus now sets on the Non-Farm Payrolls figures, due out later on Friday, for more clues over the state of the nation’s labor market.

Meanwhile, Friday’s South African Reserve Bank data stated that net foreign reserves had shrunk to $54.936 billion at the end of June from $55.045 billion in May.

As of 9:12 GMT on Friday USD/ZAR was inching up 0.06% to trade at 19.1011. In the prior trading day, the exotic Forex pair went up as high as 19.1501. The latter has been the pair’s strongest level since June 7th (19.3032).