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Forex Weekly Outlook June 6 -10

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Forex Weekly Outlook June 6 -10

The US economy failed again in May to create enough new jobs to support consumer spending after falling short in April. Although, manufacturing expanded moderately 51.3, but wasn’t enough to curtail the slump in the non-manufacturing sector from 55.7 to 51.3.

Also, unemployment rate improve from the previous 5 percent to 4.7 percent, while average hourly earnings rose 0.2 percent. With the economy adding just 38,000 workers to payrolls in May, it is right to say June rate hike is now officially out of the picture, even if we were to add 35,000 Verizon Communications Inc. workers on strike. It will still be below 159,000 forecast by economists prior to the release.

Like I said last week, the more investors price in the possibility of unchanged rate, the more the dollar will lose it’s gains like we saw on Friday after job report. This week, volatility is expected across the board as investors try to decipher possible market direction amid uncertainties surrounding the EU referendum in the UK. Fed Chair Yellen Janet is scheduled to speak on the economic outlook and monetary policy in Philadelphia on Monday.

Brexit, UK

The UK economy have been saddled with the referendum vote due in June, but not only that, certain sectors of the economy are yet to pick up, especially the manufacturing sector where orders have dropped. In April, inflation fell to 0.3 percent for the first time since September, moving farther away from BOE 2 percent target. In fact, key officials of the Bank of England’s Monetary Policy Committee were reported saying the economy will require an additional stimulus even if the referendum vote is positive.

Last week, the pound fell against all its counterparts after polls showed that number of people in support of Britain exit from the European Union has risen more than the number of people against it. Even after May economic data shows service sector growth is picking up, this sort of volatility is expected this week as we await June 23 referendum vote. Sellers and Buyers should beware.

Australia

The Australian economy is important because of the potential it holds, if well understood. Aussie dollar lost more than 70 percent of its early year gains after inflation unexpectedly contracted -0.2 percent in the first quarter of the year. Prompting the Reserve Bank of Australia (RBA) to cut rates by 25 basis points, but surprising RBA rebuke any further rates cut while insisting the economy is on track as record low interest rates are aiding economic revival.

Here are two take away, Australian economy grew 1.1 percent in the first quarter, more than 0.7 percent recorded in the final quarter of 2015. This couple with central bank data that showed business lending rose at the fastest pace in seven years and the unemployment rate of 2 1/2 year low, are key indicators that consumer spending would pick-up soon and further strengthens the Aussie dollar, especially now that the US June rate hike is out of the picture. RBA Governor Glenn Stevens is expected to announce cash rate decision on Tuesday.

New Zealand

The Kiwi economy has shown remarkable recovery since retail sales plunged in the first quarter of the year. The economy was boosted by a 2.6 percent surge in Global Dairy Trade price Index in May and subsequently reflects in the 292 million trade surplus. With the Reserve Bank of New Zealand raising its inflation expectation for  the second quarter and business confidence increasing to 11 percent in May amid  growing construction and tourism sector. It is normal for the Kiwi dollar to respond likewise.

Japan

The US job report just compounded Bank of Japan woes, one, Japan is looking for ways to intervene in its currency gains and has repeatedly said the yen move is one sided and “considered undesirable“. Two, Japan can’t intervene because of the G7 agreement that prohibit nations from using currency devaluation as a tool to stimulate growths (exports), but with investors fleeing the dollar, Euro and Pound, the flashlight is once again on the yen this week and could open up 105.21 price level against the dollar, a sustained  break should give us 102.21.

China bank holiday on Thursday and Friday. Click here to see our favourite pairs this week.

Is the CEO/Founder of Investors King Limited. A proven foreign exchange research analyst and a published author on Yahoo Finance, Nasdaq, Entrepreneur.com, Investorplace, and many more. He has over two decades of experience in global financial markets.

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Forex

Akinwumi Adesina Extols Africans in Diaspora on Cross-Border Remittance

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Akinwunmi Adesina - Investors King

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. 

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eNaira

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

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enaira

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”.

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Naira

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

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New Naira Notes

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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