Forex

Forex Weekly Outlook June 13 – 17

Published

8 years ago

June 12, 2016

Forex Weekly Outlook June 13 – 17

The dollar rallied again last week after crude oil prices plunged and commodity backed currencies followed suit, but the uncertainties surrounding global market ahead of Federal Reserve meeting this week and Britain’s referendum later in the month continues.

Last week, Fed Chair Janet Yellen said interest rate hikes are coming but gave no clue as to when, while explaining that the economy has registered considerable growth towards Fed’s goals of maximum employment and price stability, she said a shift in the economic outlook will necessitate a corresponding shift in Fed’s policy. Also the US unemployment claims improved from 268,000 to 264,000 following a six-year low nonfarm payrolls report in May. Given the current market condition, I will be trading EURUSD, AUDJPY and last week pairs.

EURUSD

The 19-nation currency, Euro is enmeshed in brexit and as such vulnerable, even with 0.6 percent revised economic growth in the first quarter. The currency remains unattractive as investors continued to seek less volatile currency with predictable direction. On the other hand, the US dollar is moderately stable with rate hike off the table, and I believe Fed’s positive assertion of the economy has renewed interest in the US dollar compared to the Euro.

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Again, the EURUSD chart shows the pair has been unable to breakout of the channel started in October, and failed again six weeks ago after reaching 1.1614. Last week’s candlestick further confirmed bearish continuation by closing as a dark cloud cover into previous bullish candlestick. This week, as long as price remains below 1.1338, I am bearish on EURUSD with 1.1090 as the target.

US retail sales, building permits and inflation reports are due later in the week.

AUDJPY

Since CPI data showed, Australian inflation fell 0.2 percent in the first quarter of the year, the Aussie dollar has lost about 827 pips. Currently, the commodity-backed currency is being weighed upon by drop in commodity prices and heightened global risks. With all the positive economic data, ranging from the fastest growth rate in four years to low unemployment rate, the currency remains unattractive as investors seem to doubt the viability of Governor Glenn Stevens claims regarding the economic outlook, especially with the fact that Australia depend on struggling China for exports and most of her manufacturing.

In fact, an investment manager who oversees the equivalent of about $11 billion in fixed income assets at BTIM in Sydney, Vima Gor published an odd analysis on Thursday, saying the Australian dollar is at far more risk than most people think, and predicted 40 cents.

While Japanese yen remain attractive and projected to be even more in demand as investors scramble for safe haven assets to curtail possible shortfall of brexit as markets await referendum result.

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From the chart, this pair has been trading in channel since October 2014 and lost a total of 2,421 pips, but after RBA cut interest rate by 25 basis points in April, the pair has failed to sustain price above 80.82 resistance level. Another confirmation is the last two rejection candlesticks (shooting stars) confirming rejection of higher prices, this week I am bearish on AUDJPY provided price remains below 80.82 resistance level while keeping an eye on Australia’s unemployment report and BOJ monetary policy statement due on Thursday. My target will be 75.83.

Last Week Recap

GBPCAD plunged 544 pips last week amid brexit, and hits our 1.8480 price target. But this week 1.8117 support level is our temporary setback and with Canadian dollar more likely to retreat with oil prices. I will be cautious and look for a sell below 1.8105 (2016 low), while targeting 1.7755.

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GBPCHF lost over 505 pips last week after closing the Monday gap during Asian trading session on Tuesday. But with our target one and two met (496 pips), I will be careful trading this pair this week for the simple fact that both paired currencies are prone to brexit’s effect. That being said, I am bearish on GBPCHF provided 1.3926 resistance level holds, with 1.3507 as target.

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USDJPY last week view is the same this week, “its failure to break 111.65 resistance level after three attempts, and eventually breaching 107.47 support level on Friday, suggest that the continuation of the downward trend has started and as long as investors are yet to know the fate of EU and UK regarding the referendum, and the US June rate hike decision off the table. The Japanese yen remain attractive, especially with G7 agreement hindering BOJ from intervening in its gains.”

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This week, as long as 107.47 resistance level holds, I am bearish on USDJPY with 105.21 as the first target and 102.17 second target.

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Samed Olukoya

Is the CEO and Founder of Investors King Limited. He is a seasoned foreign exchange research analyst and a published author on Yahoo Finance, Business Insider, Nasdaq, Entrepreneur.com, Investorplace, and other prominent platforms. With over two decades of experience in global financial markets, Olukoya is well-recognized in the industry.

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Naira

Nigerian Naira Falls to N1,641.27 Amid Improved FX Supply

Published

7 hours ago

October 12, 2024

Iyanuoluwa Martins

The Naira closed the week weaker against the US Dollar in the Nigerian Autonomous Foreign Exchange Market (NAFEX) on Friday, October 11 to N1,641.27/$1, as the local currency lost 1.15 per cent at the specialised window, according to data obtained from FMDQ Securities Exchange.

The week’s closing value was down N18.70 compared to N1,622.57/$1 published in the preceding session on Thursday.

There was a surge in turnover recorded on Friday as secondary data showed an aggregate of $616.73 million cleared on record, compared to $145.56 million, a rise of $471.17 million or 323.7 per cent.

This is more than $543.5 million announced by the Central Bank of Nigeria (CBN) announced that it sold to authorised dealer local deposit money banks (DMBs) to reduce observed market volatility driven by high demand for commodity imports and seasoned demand for FX between September 6 and 30, 2024.

The rise in supply could be a result of fresh CBN intervention in the market after it had paused for the past two weeks.

In a different pattern, the local currency closed flat against the Pound Sterling and the Euro in the week’s closing session at the official FX market.

Trading against the British currency, the local currency closed at N2,126.26/£1 while it closed at the rate of N1,772.69/€1 against the Euro.

In the Parallel market, the Naira gained on the American currency as it closed at N1,673.54 to the US Dollar, a rise of 94 Kobo compared to N1,674.48/$1 it closed during the Wednesday trading session.

The Naira strengthened its value against the Pound Sterling in the official market by N3.70 to sell at N2,136.68/£1 compared with the preceding session’s N2,140.38/£1 and followed the same pattern against the Euro as it appreciated N7.54 to quote at N1,830.29/€1 versus the previous day’s rate of N1,837.83/€1.

The local currency also appreciated N8.59 to close at N1,202.47 per Canadian Dollar, compared to Wednesday’s N1,211.06 per CAD.

Naira

Naira Records Marginal Rise on Dollar as Supply Weakens

Published

1 day ago

October 11, 2024

Iyanuoluwa Martins

The Naira exchange rate improved slightly in the official forex market as the Central Bank of Nigeria (CBN) failed to resume the retail Dutch auctions again.

The Naira rose by 0.16 percent on the US Dollar at the Nigerian Autonomous Foreign Exchange Market (NAFEM) to exchange at N1,622.57/$1 on Thursday, October 10 amid a further drop in supply at the official market.

The local currency rose on the greenback by N2.56 versus N1,625.13/$1 which it closed at the previous session on Wednesday.

Demand for foreign currency continues to overshadow FX liquidity, leaping exchange rate movement tight across the markets.

Data showed a decline in supply as the turnover published on the FMDQ Group website stood at $145.56 million. This indicated that the session’s turnover fell by 14.7 percent, indicating an appreciation of $25.04 million compared to the $170.60 million published in the last trading session.

Meanwhile, the Naira witnessed losses against the Pound Sterling and the Euro. The domestic currency made a N41.18 slide on the British currency to wrap the penultimate session at N2,126.26/£1 from N2,085.08/£1 that it sold at the previous session.

In the same trend, against the Euro, the Nigerian currency closed at N1,772.69/€1 versus N1,746.58/€1, indicating an N26.11 depreciation.

In the Parallel market, the Naira closed at N1,674.48 to the US Dollar, a difference of N22.32 compared to N1,652.16 it closed during the Wednesday trading session.

The gap between official and parallel market rates had crossed N120 in the recent past until the Central Bank of Nigeria FX intervention which has brought the gap within N50-N60 on the greenback.

The Naira weakened its value against the Pound Sterling in the official market by N27.19 to sell at N2,140.38/£1 compared with the preceding session’s N2,113.19/£1.

It followed the same route against the Euro as it appreciated N22.57 to quote at N1,837.83/€1 versus the previous day’s rate of N1,815.26/€1.

The local currency also pulled a N4.66 depreciation to close on the Canadian Dollar at N1,211.06 against Wednesday’s N1,206.40 per CAD.

Naira

Naira Gains on Dollar at Black Market, Falls at Official FX Market

Published

3 days ago

October 10, 2024

Iyanuoluwa Martins

The Naira strengthened on the US Dollar at the black market but went the other route in the official market on Wednesday, October 9.

The local currency gained N15.23 from the N1,667.39 it closed in the previous session to settle at N1,652.16 at the black market on Wednesday.

At the Nigerian Autonomous Foreign Exchange Market (NAFEX), the local currency lost N63.37 or 4.1 percent to close at N1,625.13/$1, weaker from N1,561.76/$1 it closed on Tuesday.

The daily supply of FX as measured by secondary data from FMDQ Securities Exchange Limited indicated that turnover slumped by $83.08 million or 32.7 percent to $170.60 million from $253.68 million.

The decline in supply comes as the Central Bank of Nigeria (CBN) eased with the latest data indicating that the country is not making enough foreign earnings.

For instance, Foreign Direct Investment into Nigeria in the second quarter of 2024 dropped to $29.83 million, a 65.33 percent drop compared to the $86.03 million recorded in the same period last year.

The development marks the lowest level in the last ten years.

It also reflected in both portfolio investments and foreign currency loans as Nigeria’s foreign portfolio investments for Q2 2024 stood at $1.40 billion, marking a sharp decline of 74.97 percent from $5.60 billion recorded in the preceding quarter, and a 65.3 percent drop compared to the $4.05 billion reported in Q2 2023.

Similarly, foreign loans, which constitute a substantial portion of Nigeria’s capital importation, recorded an inflow of $1.15 billion in Q2 2024, reflecting a 74.98 percent decrease from $4.60 billion in Q1 2024.

However, the Naira strengthened its value against the Pound Sterling in the official market by N46.54 to sell at N2,085.08/£1 compared with the preceding session’s N2,131.62/£1.

It followed the same route against the Euro as it appreciated N42.40 to quote at N1,746.58/€1 versus the previous day’s rate of N1,788.98/€1.

The local currency also recorded a gain on the UK Pound Sterling in the black market, the Naira rose to N2,113.19 an N18.94 gain from N2,132.13 and on the Euro, the Naira pulled an N18.37 appreciation to close at N1,815.26 versus N1,833.63 and added 53 cents on the Canadian Dollar to close at N1,206.40 against Monday’s N1,206.93 per CAD.