South African rand at 3-week high on poor U.S. jobs report, stocks climb

South Africa’s rand raced to its firmest in three weeks against the dollar to lead emerging market currencies after employment figures in United States disappointed, cooling chances of a June rate hike by the Federal Reserve.

Stocks closed higher, with gold stocks topping the All-Share Index as bullion surged more than 2 percent after the weak data from the world’s biggest economy.

By 1503 GMT the rand had gained 1.7 percent to 15.3100 per dollar, its strongest level since May 13, as the unit led a rally by emerging market currencies after the soft U.S. data. The currency had gained as much as 2.1 percent earlier.

Government bonds also firmed, with the benchmark paper due in 2026 cutting 12 basis points to 9.200 percent, also a three-week best.

The rand kicked off the local session flat, with jitters around a ratings decision by S&P Global Rating due later in the session limiting bets by investors and keeping the currency in a narrow range.

The shackles were however thrown off after U.S. nonfarm payrolls data for May showed the world’s No. 1 economy created the fewest number of jobs in more than five years.

“The dollar has fallen off a cliff. These are terrible numbers from the United States and this has probably put off interest rate hikes in June,” said chief trader at Bidvest Bank Ion de Vleeschauwer.

“Everybody is now going for the riskier high-yielding assets.”

The dollar index, which measures the greenback against a basket of major currencies showed the unit was down 1.31 percent to a four month trough.

Gold shares rose on the bourse as the metal is highly sensitive to U.S. rate expectations, as rising rates lift the opportunity cost of holding non-yielding bullion, while boosting the dollar, in which it is priced.

“U.S. non-farm payroll figures were some of the worst figures seen in the last couple of years… that diminished rate expectations in the U.S. and on the back of that everybody was just buying gold,” said Avior Capital Markets sales trader Jacques Potgieter.

Gold Fields rose 9 percent to 62 rand, Harmony Gold added 10 percent to 51 rand, while AngloGold Ashanti was up 8 percent to 236 rand.

The All-Share index ended 1.0 percent higher at 54,259 points, while the benchmark Top-40 index closed 0.85 percent higher at 48,084 points.

Trading was below average, with a total of 261 million shares changing hands compared with last year’s daily average of 280 million.