Forex Weekly Outlook May 16 – 20
Last week, the US released mixed economic data. As mixed as the figures are, the US dollar gained momentum and attracted buyers based on FED’s rate expectations and the possibility of BOJ intervening in the yen recent gains. Why I am not convinced that non-farm payrolls 160,000 jobs added in April and 294,000 surged in unemployment benefits are good enough to raise rates, I am compelled to lean towards dollar new found strength this week. So I will be looking at NZDUSD, USDCAD and GBPJPY this week.
Reserve Bank of New Zealand Governor, Graeme Wheeler said last week that risks to the financial stability outlook have increased in the past six months, and this he attributed to lower dairy prices due to increase in global dairy supplies. He also mentioned imbalances in the housing market, while the report wasn’t entirely bad. The poor retail sales 0.8 percent released on Friday was, same with core retail sales that dropped from 1.3 percent to 1 percent.
Now, looking at the chart, NZDUSD established ascending channel of January 20th was first broken on May 9th, but the pair pullback on 11th, to retest trendline at 0.6847. Forming an evening star after NZ poor retail sales and better than expected US retail sales reports. This gives us a 232-pips sell opportunity from 0.6847 new resistance level.
This week I am bearish on NZDUSD with 0.6609 as the target, while keeping an eye on Global Dairy Trade and Producer Price Index data due on Tuesday in New Zealand.
As always loonie trend is straight forward, directly proportion to increase in oil prices. But with Bank of Canada Deputy Governor, Larence Schembri, saying nothing in particular in the last central bank financial stability report, we will have to find that loophole ourselves. Canada GDP plunged 0.1 percent last month from 0.6 percent gained in the previous month, adding this to trade deficit that surged from 2.5B to 3.4 billion in March. It is obvious all is not well with the Canadian economy as exports is weak.
Looking at the chart, immediately the trade balance data came out on the 4th of May, USDCAD closed above trendline for the first time since January 20. And has since established a support at 1.2849, with a pinbar closed on Thursday and bullish daily candlestick on Friday, giving us a morning star pattern, a buying opportunity.
This week I remain bullish on this pair with 1.3142 as my target.
This is another pair I have been following for a while, first because of the uncertainty created by the European Union and British June 23 referendum vote, second, because I am in tune with BOJ policies and I think GBPJPY has been oversold since the yen starts its gain and currently trading at 3-year low.
After breaking out of the downward trend on April 22, the pair has been unable to sustain 161.71 price level, hence, lost around 600 pips. While buying might not be okay now if you are not looking at long-term, so is selling because of uncertainty surrounding BOJ monetary policy and poor economic data released from the UK last week. Another reason is a possible change in Bank of Japan monetary policy has the potential to trigger a massive buy.
From the chart, price retest trendline after break-out and has since been trading above 154.39 support level, as long as this support level holds, I remain bullish on GBPJPY and if referendum came out positive or BOJ make monetary policy changes by adding additional stimulus. I will be looking to buy for 161.71 as first target and 169.21 as second, but until then leave comments and lets interact.
What do you think?
Akinwumi Adesina Extols Africans in Diaspora on Cross-Border Remittance
African Development Bank (AfDB) President, Akinwumi Adeshina has extolled the tenacity and impacts of Africans in Diaspora on cross-border remittance.
According to the AfDB President, Africans in the diaspora are the continent’s largest financiers through their yearly remittances.
Speaking at an event organised by the Bank in collaboration with the African Union Commission, Adeshina noted that cross-border remittance into Africa is more than development assistance to the continent.
Investors King earlier reported that remittance into Nigeria and other countries in the sub-Sahara Africa region hits $53 billion in 2022.
The AfDB President said, “The value of remittances from the African diaspora doubled from $37 billion in 2010 to $87 billion in 2019, reaching $95.6 billion by 2021. Yet official development assistance to Africa in 2021 was $35 billion, or 36% of the remittances from the diaspora”.
Adeshina added that Egypt and Nigeria are among the top-ten remittance recipients globally, with $31.5 billion and $19.2 billion, respectively in 2021.
While speaking on the advantage of cross-border remittance to the African continent, the AfDB president noted that remittances have helped to meet financial, food, education, and health needs of many Africans, “it as well as serve as countercyclical sources of finance,” he said.
“The African diaspora has become the largest financier in Africa! And it is not debt, it is 100% gifts or grants, a new form of concessional financing that is the key for livelihood and security for millions of Africans” he added.
Similarly, Adeshina further positioned the need to eliminate premium charges on cross-border remittance into Africa. He noted that cross-border into Africa is twice what is it for South Asia.
He concluded that the Africans in diaspora can add more than remittance and investment, noting that they have skills, knowledge and know-how which can be needed for the development of the continent.
“They can help build world-class universities, and they can be mentors for the new generation of Africans,” he said.
E-Naira Transaction Volume Rises to N5 Billion in November Amid Intensified Campaign
More Nigerians embrace eNaira wallet as CBN takes adoption campaign across the nation
The Central Bank of Nigeria, (CBN) has disclosed that e-Naira transaction volume rose to a record N5 billion in the month of November following a series of campaigns initiated to encourage adoption.
Investors King had earlier reported how the e-Naira adoption team visited a number of parks in Abuja and the University of Lagos among other locations to drive the adoption of the digital currency.
Speaking at the Second Edition of the Africa Cashless Payment Conference, CBN’s Director of Information and Technology, Hajiya Rakiya Mohammed noted that transaction on the e-naira platform does not attract any charges.
She stated that Nigeria’s financial ecosystem is large to accommodate everyone.
Hajia Rakiya added that the e-Naira platform can be operated in any of Nigeria’s major local languages, stating that onboarding onto the e-Naira platform is a simple process.
She further stressed that the primary goal of the e-naira is to reduce the amount of cash in circulation, thereby downsizing the cost of producing paper currency, increase in revenue and direct disbursement to citizens.
Meanwhile, the e-Naira circulation has reached N401.82 million as more Nigerians embraced the digital currency.
It could be recalled that on October 25, 2021, CBN launched the e-Naira making Nigeria the first African country to have a digital currency.
During the unveiling of the e-Naira in Abuja, President Muhammadu Buhari stated that the digital naira would increase remittances, foster cross-border trade, improve financial inclusion and enable the government to make welfare payments more easily.
On his part, the CBN Governor, Godwin Emefiele disclosed that the e-Naira offered Nigerians endless possibilities in using financial services.
While admonishing more Nigerians to embrace the digital naira, Hajia Rakiya noted that “both banked and unbanked can use it, and it can be done through USSD *997#. We have integrated it with telecoms and NIBBS instant payments plus integration with money transfer operations so you can use e-naira for cross border”.
CBN Will Redesign Naira Notes Every Five to Eight Years; Say Emefiele
The central bank will henceforth redesign the nation’s legal tender every five to eight years
Governor of the Central Bank of Nigeria (CBN), Godwin Emefiele has said the bank will henceforth redesign the nation’s legal tender every five to eight years.
The apex bank governor revealed at the unveiling of the new naira notes on Tuesday.
Godwin Emefiele explained that the naira redesign is in line with global best practice noting that the naira needed to be redesigned and re-issued every five to eight years.
According to the CBN governor, previous administrations lacked the political will to approve the redesign of the naira notes. Stating that it is regrettable that the naira has not been redesigned for the past 19 years.
“In the past, I have to confess that attempts by the CBN to redesign and re-issue the naira notes have been resisted. It is only President Muhammadu Buhari that has exhibited the courage to do so,” the CBN governor stated.
Emefiele added that going forward, naira notes will be redesigned at intervals to address some peculiar issues.
“After today, the CBN will begin to redesign and reissue the naira every five to eight years,” he said.
Investors King had earlier reported that President Muhammadu Buhari unveiled the redesigned naira notes at the Federal Executive Council (FEC) meeting today.
Among those who joined the president with the unveiling include the CBN governor and the EFCC chairman.
Recall, in October, the CBN announced it will redesign the N200, N500 and N1,000 notes in line with its mandate.
Meanwhile, the CBN governor has disclosed that the new naira notes can not be counterfeited because of the features embedded in them.
Similarly, he added that security agencies would be monitoring people making withdrawals at the counter to sniff out money laundering and unravel illegal usage.
“The CBN has moved to a cashless economy. We will restrain the volume of cash someone will withdraw over the counter. We will follow up with the person’s data to know the reason for such withdrawal,” he concluded.
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