South Africa's rand slips ahead of Ramaphosa's state of the nation address

JOHANNESBURG, Feb 7 (Reuters) - South Africa's rand weakened early on Thursday as a bounce-back by the dollar aided by positive economic data put the local currency on the back foot ahead of President Cyril Ramaphosa's state of the nation address this evening.

At 0640 GMT the rand ZAR=D3 was 0.17 percent softer at 13.5700 per dollar compared to its close of 13.5475 overnight in New York.

The rand has now retreated around 2.5 percent since last Thursday's rally to a two-and-a-half year peak, tracking fellow high-yielding emerging market currencies hit by a bout of risk aversion triggered by better U.S. economic data.

On Wednesday the United States reported a narrower trade gap, helping the dollar index .DXY to a fifth straight session of gains. no top-tier economic data due locally, focus is expected to shift to Ramaphosa's speech after the market close, with investors looking for clues about the fate of cash-strapped state power firm Eskom.

On Wednesday a monthly measure of business confidence noted concerns about slowing progress in promised reforms to ailing state firms and the broader economy. also weakened, with the yield on the benchmark government issue due in 2026 adding 2 basis points to 8.67 percent.

Stocks were set to open lower at 0700 GMT, with the JSE securities exchange's Top-40 futures index ALSIc1 down 0.48 percent.