South Africa's rand firms, cautious trading seen

JOHANNESBURG (Reuters) - South Africa's rand extended its rally against the dollar to hit its highest level in more than a week on Monday, helped by upbeat Chinese factory data and a delay in a possible Western military strike against Syria. The rand was at 10.1900 to the dollar at 0555 GMT, 0.9 percent stronger than its close in New York on Friday. The rand has remained vulnerable to labour unrest that has swept Africa's largest economy, with South African gold miners due to strike for higher pay from Tuesday. After slumping to a four-year low last Wednesday, the rand ended the week on stronger footing after Finance Minister Pravin Gordhan suggested the government may intervene to support the currency. Data on Sunday showing China's factory activity expanded at its fastest pace in more than a year in August suggested that the economic slowdown in South Africa's biggest bilateral trading partner may be moderating. U.S. President Barack Obama's decision to seek congressional approval for a strike against Syria also helped to calm nerves in the market. Investors have sold off emerging-market assets due to uncertainty about Syria and shifted funds to safe-haven economies. Trading is expected to be cautious this week ahead of interest rate decisions by the Bank of England and European Central Bank as well as U.S. non-farm payrolls data on Friday. The closure of U.S. markets for the Labor Day holiday on Monday could also affect liquidity. "We remain structurally bearish about the rand in the short and medium term," Absa Capital analysts wrote in a note. Government bonds were firmer, with the yield on the 2026 issue down 3 basis points at 8.455 percent and that on the 2015 paper 4 basis points lower at 6.47 percent.