The rand was a tad weaker in early trade on Thursday after yesterday's firmer tone, as the euro retreated from the $1.60 level. All eyes will be on local PPI data at 11.30am.

By 08.25am the rand was bid at 7.6744 to the dollar from a previous close of 7.6270. It was bid at 12.1696 to the euro from a previous 12.1828 and at 15.1693 against sterling from 15.1563 before.

The euro was bid at $1.5845 from $1.5883 overnight, while gold was quoted at $904.05 a troy ounce from $903.62/oz overnight.

RMB analysts said in their morning report that the rand whiplashed as USD/ZAR fluctuated wildly in the 7.61-7.69 range yesterday.

This was largely flow-driven but the sharp reversal of EUR/USD from the 1.6000 handle clearly helped prevent ZAR gains from extending.

"The market initially didn't know how to take the higher-than-expected CPIX inflation number — 10.1 percent versus an expected 9.7 percent — but within an hour or so the ZAR was pushing sharply weaker. While this is all mixed up with the general volatile environment, it does suggest that the market takes the growth argument (higher inflation = higher rates = slower growth = less foreign portfolio inflows) as more important than the interest rate differential view," they said.

Today attention turns to the producer inflation numbers. The increase in South Africa's producer price index is expected to have dipped to 10.9 percent year-on-year in March from the uncomfortable 11.2 percent year-on-year increase in February, a survey by I-Net Bridge has found.

Forecasts ranged from 10.1 percent year-on-year to as high as 11.5 percent year-on-year. PPI was at 10.3 percent a year ago, providing a high base.

Bonds under pressure on rate concerns

Bonds remained under pressure in early trade on Thursday as rate expectations shifted higher.

Higher interest rates affect bond yields and push them higher due to the supply and demand shortfall that would ensue if they remained the same. They need to adjust higher to remain competitive with other rates. This means prices dip in turn.

By 09.02am the short-term government R153 bond was at 10.290 percent from 10.185 percent at its previous close, while the medium-term R157 was at 9.470 percent from 9.400 percent at its previous close. The longer-term R186 bond was bid at 9.285 percent from its previous close of 9.220 percent.

I-Net Bridge