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South African rand pauses, with focus on U.S. jobs report

Kitco News

(Updates prices, adds stocks)

JOHANNESBURG, Sept 3 (Reuters) - The South African rand got a boost Friday after a closely watched U.S. jobs report came in well below expectations, meaning the United States’ central bank is likely to hold off on scaling back its massive stimulus measures.

U.S. non-farm payrolls increased by 235,000 jobs last month, far below the 728,000 jobs expected by economists polled by Reuters.

The Federal Reserve has made a labour market recovery a condition for paring back its pandemic-era asset purchases, making the jobs data a major event that sent a wave through markets globally.

At 1500 GMT, the rand traded at 14.2750 against the dollar, almost 1.5% stronger than its previous close, while the U.S. dollar dropped to its lowest level since Aug. 4.

Along with other risk-sensitive currencies, the rand moves regularly on shifts in the outlook for U.S. monetary policy.

It gained strongly against the greenback early this week, after a dovish speech by Fed Chair Jerome Powell last Friday suggested the bank was in no rush to raise interest rates.

Locally, investors will study PMI data at 0715 GMT for clues about the pace of South Africa’s economic recovery from COVID-19.

Next week, the statistics agency will release second-quarter gross domestic product numbers, which will provide a fuller picture.

Stocks closed lower, with the Johannesburg Stock Exchange’s Top-40 Index slipping 0.42% to 60,107 points and the broader All-Share Index falling the same amount to 66,372 points.

While gold and platinum companies all rose, thanks to the price of their metals shooting up following the U.S. jobs data, companies that tend to suffer when the rand is stronger slipped back.

The government’s benchmark 2030 bond dipped, with the yield rising 5 basis point to 8.810%. (Reporting by Alexander Winning and Emma Rumney Editing by Mark Potter and Angus MacSwan)

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