Wood carving?

According to RMBAM and Business Day, the rand carved out modest gains yesterday as the dollar slipped on the back of tame US inflation data, but gains were capped, with traders reluctant to hold short-dollar positions.

The rand firmed 6,5c to an intraday best level of R6,38 against the dollar, also helped by export inflows, pushing away from a seven-month trough of R6,4490 tot he dollar plumbed on Tuesday.

It was trading at about R6,4150 to the dollar by 2.20pm compared to R6,4450 on overnight trade. While exporters have been demonstrating interest to sell on moves up to R6,45, the market still looks to prefer to be long dollars after the recent move.

In New York yesterday, the dollar dipped as weaker-than-expected US core consumer inflation report for April made it less likely the Federal Reserve will become more aggressive in raising interest rates.

The core consumer price index, which strips out food and energy costs, was unchanged from March, its first flat reading since November 2003. On a year-on-year basis, it rose 2,2% marking the second straight month the core inflation gauge moved lower.

The euro was at $1,2683 up about 0,6% from late Tuesday.