Johannesburg, Jan 9 (I-Net Bridge) - The rand was a tad firmer against the dollar in early morning trade on Monday as it tracked a euro that had modestly recovered from setbacks in early Asian trading.
"Liquidity is starting to look better now with the holidays nearing an end," a local rand trader said.
"We may even see the rand a bit bullish today as guys seem more optimistic - risk appetite is looking better than it did last week," he added.
"But we really can't take our eye off the euro."
The trader added that the release of reserves data by the SA Reserve Bank had had no impact on the rand.
"The figures would have to contain a huge shock to impact on the currency," he said.
At 08:55 local time, the rand was bid at R8.1654 to the dollar from its previous close of R8.1720. It was bid at R10.3824 to the euro from R10.3591 before, and at R12.5900 against sterling from R12.6016 previously.
The euro was bid at US$1.2717 from its previous close of US$1.2679.
Earlier the SARB said its dollar-denominated holdings of gold and foreign assets had dropped by US$790 million to US$48.860 billion in December from US$49.650 billion in November.
RMB said in a morning note that the big currency theme was the run on the euro.
"With the sovereign crisis, the relative underperformance of the eurozone economy and the ECB liquidity injections, it's hard to find a positive word to say on the unit."
RMB added that aggressive euro selling created scope for short-covering rallies, as seen early last week, "but we should assume the trend is for euro weakness."
Dollar rand was caught between the better global economic environment and a falling euro dollar.
This had resulted in a swing between 8.02 and 8.22 over the holidays.
"Pressure is to the upside of this range this morning. The big adjustment has come in euro rand though, where there have been moves to four-month lows at 10.35."
Meanwhile Dow Jones Newswires reported that the euro had slumped to a fresh 15-month low against the dollar on renewed eurozone debt worries, but had recovered modestly later on Monday, as eyes turned to a key meeting between the heads of state of Germany and France.
France's Nicolas Sarkozy and Germany's Angela Merkel were expected to meet in Berlin on Monday to begin preparations for a European summit later this month.
No specific announcements or breakthroughs were expected from the meeting, but investors hungry for cues might seize on the atmospherics of the meeting for direction.
"Any sign of discord would be taken negatively for the euro," said David Forrester, G-10 currency strategist at Macquarie Group.
Early in the Asian day, a pair of reports from European news outlets set a gloomy scene for risk-off trade on Monday. German magazine Der Spiegel cited an International Monetary Fund note that showed growing doubts about Greece's long-term ability to reduce its debts. And Czech central bank Governor Miroslav Singer was quoted by a local daily as saying Greece should quit the eurozone, according to Reuters.
US weekly Commitments of Traders data released on Friday indicated that traders had recently added to their already heavy short-euro positions. That could create some upside for the euro, but analysts said downside risks were greater given the Merkel-Sarkozy rendezvous and ECB meeting later this week.
"There's plenty of fuel for an unwind of euro shorts, but it's very difficult to see what would intervene to drive the euro higher," said Robert Ryan, currency strategist at BNP Paribas.
Bids: 08:55 local time Range so far Previous Close
(06:55 GMT)
Dlr/Rand 8.1654 8.1218-8.1846 8.1720
Euro/Rand 10.3824 10.2705-10.4003 10.3591
Sterling/Rand 12.5900 12.5098-12.6150 12.6016
Euro/Dollar 1.2717 1.2676-1.2728 1.2679
End
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