South Africa's rand on the ropes as rate hike expectations spur dollar

JOHANNESBURG (Reuters) - South Africa's rand reversed gains against the dollar on Thursday, after investors put behind them a recent raft of soft U.S. data to still price in the prospect of higher rates in the world's biggest economy. Better-than-expected domestic mining and factory output data helped offset some of the pressure on the rand, but traders and analysts said further losses were on the cards. At 1550 GMT, the local unit traded at 11.9150 per dollar, 0.9 percent weaker than where it ended the New York session on Wednesday. Government debt also edged lower, with the benchmark 2026 instrument yielding 7.635 percent at the close, up half a basis point from the previous day. The dollar was on course for a third day of gains against major currencies - having been on shaky ground following last Friday's batch of weak jobs data last week - after two U.S. Federal Reserve officials said rates could still rise in June. "The market has been disappointed by U.S. data lately ... but that seems to be changing," said HSBC EMEA currency strategist Murat Toprak. "Slightly good economic data in South Africa has supported the rand but at the end of the day what is pushing dollar/rand higher is clearly the stronger dollar after the correction after non-farm payrolls." South Africa mining output climbed 7.5 percent year-on-year in February, the statistics agency said, against economists' expectations for a 0.4 percent contraction. Manufacturing production in the same month contracted, but not as steeply as in January, Statistics South Africa said.