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Forex Weekly Outlook May 30 – June 3

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Jared Martinez

The U.S. dollar continues its run after data showed first quarter GDP growth was higher than previously estimated, and revised upward from 0.5 percent to 0.8 percent. Also, unemployment claims post moderate decline to 268,000 from 278,000, beating economists forecast of 275,000. While this is not bad, Federal Reserve Chair Janet Yellen on Friday said an interest rate hike is “Probably appropriate in the coming months“. This is a big statement considering the fact that the market has already priced in the possibility of a June rate hike, and as more investors come to terms with the possibility of unchanged rate in June I expect US dollar to lose some gains. And even more as the odds changes. So I am going to pay attention to the US dollar differently this week, especially with Unemployment rate, ECB press conference, Non-Farm Payrolls and average hourly earnings due this week. Also, I be looking into GBPJPY, NZDUSD and USDCAD.

GBPJPY

The pound has been battered by brexit and its politics, but as the votes draw closer more politicians are coming out to support the Union of Europe and Great Britain, which is gradually increasing investors’ confidence in the region once again. On the other hand, the Bank of Japan is still looking for ways to curtail the yen gains in order to ease the pressure on its manufacturing sector due to weak oversea orders, and with continuous comments from both Japan’s Finance Minister Taro Aso and BOJ governor Haruhiko Kuroda on why current gain is bad for Japan and the needs for them to intervene, they have strategically rendered the yen unattractive. Hence, paving way for GBPJPY buyers.

GBPJPYDaily

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So looking at the chart, this pair has gained 597 pips since three weeks ago that I first posted the chart and breach 161.71 resistance level twice but failed to sustain it. Further confirming this upsurge is the three higher-lows double bottom established on the daily chart from the retest to last week Monday/Tuesday and Friday candlestick  that closed as a pin bar. As long as price remains above 161.71 price level, I am bullish on GBPJPY with 165.66 as the first target and 169.21 as the second.

NZDUSD

New Zealand dollar continues to lose ground even after recording $292 million trade surplus from the previous $189 million, and beating analysts forecast of $40 million. The economy is still struggling with low exports and drop in price of global dairy products as China, its largest trading partner is far from recovery.

NZDUSDDaily

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This pair has lost about 151 pips in the last three weeks and hit our 0.6771 target, as long as new resistance 0.6771 holds, I am bearish on NZDUSD pair with 0.6609 as the target. Global Dairy Trade report is due on Wednesday.

USDCAD

This week, Canadian monthly GDP and Trade balance reports are due. But since 1.3142 target was hit three weeks ago after May 4th break-out from the downward trend that started on January 20 this year. I can’t help but to treat current trend as a continuation of the break-out, and with the Friday’s bullish pin bar I am bullish on USDCAD this week, and expect a sustained break of 1.3142 resistance level to attract enough buyers to open up 1.3387 target. It is important to keep an eye on Tuesday GDP and make adjustments accordingly.

USDCADDaily

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Last Week Recap

Last week EURUSD dropped 132 pips in our favour to 1.1109, but short of 1.0925 target. This week, I am neutral on eurusd because of numerous economic data coming out later in the week and uncertainties surrounding June rate hike and brexit.

GBPUSD

Cable rose as high as 1.4738 after the report of “EU Remain” polls were made public. The pair has since lost 132 pips, this week, I am bearish on cable as long as 1.4732 holds, with 1.4509 as the target.

GBPUSDDaily

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AUDUSD

Last week,  Australia’s private capital expenditure for the first quarter of the year plunged 5.2 percent from 1.8 percent recorded in the final quarter of 2015.  Showing investors are gradually losing confidence in the economy. The pair dropped 114 pips last week to 0.7144, this week I am still bearish on the Aussie dollar with 0.7088 as the first target, and if the building permit and first quarter GDP report schedule to be released later in the week support this analysis, 0.6699 will be the second target.

AUDUSDDaily

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A wonderful week to us all, and please drop comments.

CEO/Founder Investors King Ltd, a foreign exchange research analyst, contributing author on New York-based Talk Markets and Investing.com, with over a decade experience in the global financial markets.

Naira

Daily Naira Exchange Rates; Thursday, May 6, 2021

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Naira Exchange Rates - Investors King

Naira depreciated further at the parallel market on Thursday as the local currency traded at N485 to a United States Dollar. The Nigerian Naira exchanged at N676 to a British Pound and N585 to a Euro as shown below.

Naira Black Market Exchange Rates

Morning * Midday** Evening *** Final Rates

Date USD GBP EURO YUAN Canadian Australian
NGN BUY/SELL BUY/SELL BUY/SELL BUY/SELL BUY/SELL BUY/SELL
06/05/2021 480/485 665/676 575/585 62/69 395/405 292/320

Bureau De Change Naira Rates

Date

USD

GBP

EURO

NGN

BUY/SELL

BUY/SELL

BUY/SELL

06/05/2021

475/482

663/676

575/587

06/05/2021

475/482

663/676

575/587

Central Bank of Nigeria’s Official Naira Rates

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Forex

CBN Extends N5/$ Incentive Period to Boost Dollar Inflow

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Godwin Emefiele - Investors King

The Central Bank of Nigeria (CBN) has extended the N5 per US Dollar incentive on forex remittance indefinitely to boost liquidity and further deepen economic recovery.

The initiative was scheduled to end on May 8. It was introduced to encourage recipients of dollars to use formal banking channels and help the central bank capture such inflows to boost the stability of the local currency, which has been under pressure after oil prices plunged last year.

“We hereby announce the continuation of the scheme until further notice,” the regulator said in a statement on its website on Thursday.

The naira has been devalued three times since last year after a sharp drop in oil earnings, which accounts for 90% of foreign-exchange inflows, and remittances from workers abroad led to a dollar crunch in the West African nation, which produces the most crude in Africa. The local unit traded for 410.31 on the investors and exporters window, also called Nafex, as of 8:51 a.m. in Lagos.

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US Dollar

Dollar Falls as Risk Appetite Improves, Sterling Dips on BoE

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US Dollar - Investorsking.com

The dollar dropped to its lowest point in three days on Thursday as global market risk appetite improved, while sterling zig-zagged after the Bank of England slowed the pace of its bond-buying, but left interest rates unchanged.

Fewer Americans filed new claims for unemployment benefits last week, data showed, as COVID-19 vaccination efforts and massive amounts of government stimulus led to a further reopening of the economy.

While the U.S. economy has been gaining steam, Federal Reserve speakers on Wednesday downplayed the risks of higher inflation.

Those statements reinforced “the lower-for-longer mentality with regards to interest rates,” making the greenback less appealing, said Neil Jones, head of FX sales at Mizuho.

The safehaven U.S. dollar was last down 0.31% at 91.977 against a basket of peer currencies.

“What we’ve seen early in New York is a little bit of back-and-forth gyrations, just because of the Bank of England meeting,” said Erik Bregar, director and head of FX strategy at the Exchange Bank of Canada.

The Bank of England said it would slow the pace of its bond-buying as it sharply increased its forecast for Britain’s economic growth this year after its coronavirus slump, but it stressed it was not tightening monetary policy.

“They kept their QE target in place but they said they are going to reduce the weekly pace of purchases, but that’s not a signal and so sterling has kind of gone up and down and done nothing at the end of the day,” Bregar said.

The pound was last down 0.08% against the weaker dollar at $1.3900 .

The euro was up 0.47% versus the dollar at $1.2061 , and up 0.65% against the pound, at 86.88 pence per euro.

Investors were also paying attention to elections in Scotland that could herald a political showdown over a new independence referendum.

The Australian dollar fell sharply overnight when China said it would stop its economic dialogue with Australia, but the currency had recovered to trade close to flat on the day as European markets opened.

The Aussie was up 0.1% versus the U.S. dollar at 0.77515 at 1028 GMT, having hit as low of 0.7701 overnight.

The New Zealand dollar also dropped and was down 0.1% on the day.

“The announcements of the formal suspension of the economic dialogue between China and Australia should not have a lasting impact on markets given the already strained relationship between the two ahead of the event,” wrote ING strategists in a note to clients.

The Canadian dollar hit a three-and-a-half year high, helped by oil price gains and the Bank of Canada’s recent shift to more hawkish guidance.

In cryptocurrencies, ether traded around $3,500 after reaching a record high of $3,559.97 on Tuesday, skyrocketing nearly 800% this month.

Bitcoin declined 0.2% to $57,392.75.

The meme-based virtual currency Dogecoin soared on Wednesday to an all-time high, extending its 2021 rally to become the fourth-biggest digital coin.

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