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Forex

Forex Weekly Outlook June 27 – July 1

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Euro currency

Global financial markets were thrown into turmoil after the U.K. exit the world’s biggest market, the European Union. Pushing the pound to over 30-year low against the US dollar as investors scramble for haven assets.

The risk was further compounded by the decision of Prime Minister David Cameron and the British representative to the European Union Jonathan Hill to resign following Brexit. It is yet unknown when the UK will trigger article 50 of the Lisbon Treaty and get on with the exit process, which could take between 2 to 5 years, but the Governor of the Bank of England Mark Carney in his post-Brexit statement said the apex bank has prepared for this day and as such has made provision for about 600 billion pounds to support the UK financial system and strengthens businesses to create jobs and enhance growth going forward.

On the other hand, the American labor market rebounded last week after May’s weaker than expected non-farm payroll, the unemployment claims improved by 18,000 to 259,000, which suggest moderate growth in the second quarter of the year. Although there were weakness in the housing and manufacturing sectors, but was overshadowed by the increase in demand for the US dollars due to Brexit.

On BOJ, the continuous rush for haven assets has compounded Japan’s situation, while Japan Finance Minister Taro Aso has repeatedly said the yen move is one sided,  I don’t think G7 and G20 will give BOJ go ahead to intervene in the yen’s gains, considering global Risks.

This week, US first quarter final GDP, US consumer confidence index, US crude oil inventories, UK current account, Canada monthly GDP, US unemployment claims and purchasing Manager indexes (China, US, UK) are key economic factors to look out for. Here are my forex weekly pick EURUSD, AUDJPY and NZDJPY.

EURUSD

EURUSDWeekly

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For the past two weeks I have been bearish on EURUSD but the global uncertainties weigh upon it, hence, the pullback before last week bearish confirmation. As long as price remains below 1.1338, I am bearish on EURUSD but with entry around 1.1090, that double as our target two weeks ago and also a price continuation below the channel. Target for the week will be 1.0714, while keeping an eye on global growth as things unfold in coming days.

AUDJPY

AUDJPYWeekly

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The same two weeks ago I made mention of AUDJPY pair, although our target was hit at 75.83. The pair still holds considerable sell potential of around 272 pips. I remain bearish on AUDJPY as long as 78.15 resistance level holds, with 73.54 as the target.

NZDJPY

NZDJPYDaily

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After failing to sustain a break of the downward trendline started since last year. The pair has finally given in to Brexit pressure reach over 4-year low on Friday. This week, as long as 73.90 resistance level first established in 2008 hold. I am bearish on this pair with 69.94 as the target.

This should be traded with great caution as high volatility is expected across the board this week as investors try to decipher both ECB and BOE direction going forward. All take profit targets were hit last week.

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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