South African rand steady as markets cautious ahead of US CPI print

South African Rand coins are seen in this illustration picture taken October 28, 2020. REUTERS/Mike Hutchings/Illustration

JOHANNESBURG (Reuters) – The South African rand was steady in early trade on Tuesday, as investors across global markets maintained a cautious stance ahead of a closely watched U.S. inflation data due this week.

At 0615 GMT, the rand traded at 18.3500 against the dollar, not far from its previous close of 18.3350. No major South African economic data releases are due on Tuesday, so the rand is expected to mainly move on global drivers.

Investors are keenly focused on Wednesday’s U.S. consumer inflation report after Federal Reserve chair Jerome Powell said last week that policy decisions will be “driven by incoming data,” while signalling a likely pause in the rate hiking cycle.

The rand has underperformed relative to emerging market peers this year, as a power crisis showed no sign of abating and investor sentiment has been sapped by the country’s “greylisting” by international financial crime watchdog the Financial Action Task Force. The currency is down more than 7% against the dollar year-to-date.

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