JOHANNESBURG, Aug 14 (Reuters) - The South African rand weakened on Thursday after a bigger-than-expected increase in U.S. producer prices reduced the odds of a super-sized September Federal Reserve rate cut.
U.S. PPI inflation jumped 3.3% in July, topping the 2.5% Reuters consensus. Fed funds futures traders are pricing in a near certainty that the U.S. central bank will make a 25-basis-point rate cut next month, but had also begun to speculate that a larger cut could be on the table.
At 1604 GMT the rand traded at 17.61 against the dollar , about 0.6% weaker than Wednesday's close and paring gains of more than 1% over the last two days.
With no major local data releases left this week, the rand is expected to take its cue from global drivers.
The Johannesburg Stock Exchange's Top-40 index closed 0.3% lower.
South Africa's benchmark 2035 government bond was little changed, with the yield down half a basis point to 9.605%.
Reporting by Sfundo Parakozov; Editing by Kim Coghill, Kirsten Donovan
Source: Reuters