The rand remained buoyed by positive sentiment in early trade on Wednesday, with the euro and foreign investment the main drivers. However, investors will be keeping a close watch on inflation data later this morning as it may indicate more rate hikes are in the pipeline.

The euro was bid at $1.5966 from $1.5996 overnight, while gold was quoted at $918.90 a troy ounce from $916.25/oz overnight.

RMB analysts said in their morning report that there was no obvious driver of the move stronger yesterday, although EUR/USD's later move to test 1.6000 on hints, later denied, that the ECB is considering hiking rates, offers some post-event justification.

“We have also had a string of positive news on the FDI front, with three deals totalling $492m announced in the last three business days, the latest being VVP's $160m purchase of a stake in Highveld Steel and Vanadium,” they added.

Whatever the driver, the analysts say sentiment is still positive towards the rand.

Support is now evident in the 7.60/63 area, then at 7.56, 7.48 and 7.39.

“Further downside shouldn't be ruled out, especially if EUR/USD manages to break 1.6000. Key here will also be today's CPI figures,” conclude the analysts.

Consumer inflation excluding interest on mortgage bonds (CPIX) — the measure used by the South African Reserve Bank for its inflation target — is expected to increase to 9.7 percent year-on-year in March from 9.4 percent in February, an I-Net Bridge survey has found.

The data is due at 11.30am.

Bond yields drifted a little weaker during slow early trade on Wednesday as players remained nervous ahead of the key CPIX release at 11.30am.

By 08.57am the short-term government R153 bond was at 10.020 percent from 10.000 percent at its previous close, while the medium-term R157 was at 9.280 percent from 9.260 percent at its previous close. The longer-term R186 bond was bid at 9.110 percent from its previous close of 9.080 percent.

The rand was last bid at 7.6271 per dollar from its overnight close of 7.5820.

I-Net Bridge