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Forex Weekly Outlook August 1 – 5

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Dollar

Global risks and financial markets’ volatility increased after Janet Yellen led FOMC held rates unchanged on Wednesday, citing global uncertainty and inconsistency in the economic figures. The situation was further compounded by the Bank of Japan decision to keep widely speculated policy rate unchanged but increased exchange traded funds by $26 billion a year.

Last week was packed with mixed economic report, the US economy expanded at a 1.2 percent rate in the second quarter of the year, falling below 2.6 percent forecast by economists. While Unemployment claims rose 14,000 to 266,000 in the week ending 22 July, but housing sector remains moderate with a solid consumer confidence.

Overall, the US economic outlook remains mixed, one because the Fed said risks to the US economy had reduced but policy makers need more time to assess Brexit possible impacts on global economics. Two, if the risks to the US economy has subsided while leaving rates unchanged?, although the Chair Janet Yellen reiterated that the Fed will raise borrowing costs gradually, but the financial markets already priced out that possibility this year and interpreted the comments as less hawkish, sending the US dollar down against most of its counterparts on Friday. This week, I will be looking at GBPJPY, AUDUSD, and USDJPY.

GBPJPY

The UK economy is enmeshed in a negative perception after the Britons exit the European Union, even though post-Brexit effect is yet to crystallize, investors and businesses are already making adjustments to their investments and holding back on long term plans to avoid being caught up in potential recession. Although, the GDP rose more than expected in the second quarter of the year, the data were collected prior to Brexit. While few data collated ‘post-Brexit’ have shown signs of slowdown in consumer spending that has been supporting the economy since oil glut started.

GBPJPYDaily

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On the other hand, the yen continued to gain after the Bank of Japan limited stimulus expansion to manage investors’ overzealous activities that could daunt whatever confidence is left of the economy. Technically, the GBPJPY has been on a downward trend since 25 June 2015, but with the yen renewed gain below 135.95 price level, the GBPJPY might have started continuation that will open up 129.86 support level. As long as price remains below 135.95 resistance level, I remain bearish on this pair with 129.86 as target.

AUDUSD

The Australian dollar is overpriced and has forced the Reserve Bank of Australia to consider additional rate cuts to pressure costs and boost consumer prices. Currently, traders have priced in 25 basis points cut to 1.5 percent record low against RBA monetary policy meeting on Tuesday.

AUDUSDDaily

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The Aussie dollar has gained around 528 pips since May 24 to peak at 76.71 cents against the dollar. If the Reserve Bank of Australia cut interest rates by 25 basis points to 1.50 percent. The AUDUSD pair is expected to plunge below ascending channel started in May as shown above. A sustained break of 0.7505 support level should attract enough sell orders to force 0.7379 first target, and 0.7143 second target in the days to come. So I remain bearish on AUDUSD.

USDJPY

Since both the Fed and Bank of Japan failed to impress investors this pair has lost over 363 pips. As long as 104.25 resistance level holds. I am bearish on this pair with 99.16 as the target.

USDJPYDaily

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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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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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Naira

President Buhari Unveils New Redesigned Naira Notes, See Pictures

Buhari launched the new naira notes as the CBN forges ahead with redesign plans.

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New Naira Notes

President Muhammadu Buhari on Wednesday unveiled the new redesigned Naira notes at the State House in Abuja following a series of sensitisation to ensure that Nigerians are aware of the deadline for the old notes.

New Naira Notes

Godwin Emefiele, the governor of the Central Bank of Nigeria, who was also present at the launching explained that the redesigned notes would help curb counterfeit, reduce hoarding and support the apex bank’s cashless policy.

Earlier in October, the central bank announced it was redesigning the N200, N500 and N1,000 notes in line with its mandate. The apex bank further stated that the newly redesigned notes would be available on December 15, 2022.

However, Emefiele later announced the central bank won’t wait until December 15th before unveiling the new notes on November 2023.

He said, “100 days is enough for any person from any part of Nigeria to deposit his money in the bank and get his money when the new notes are released.

“For information, indeed, we are no longer waiting till December 15th to unveil and begin to release the new notes.

“By the special grace of God, tomorrow, which is the 23rd of November 2022, the President has graciously accepted to unveil the new currencies and the new currencies will be unveiled tomorrow at the Federal Executive Chamber by 10am.”

New Naira notes

Meanwhile, the central bank-led monetary policy committee raised interest rates by another 100 basis points from 15.5% to 16.5%. Bringing the total increase in 2022 to 500 basis points despite the challenges Nigerians are facing amid weak job creation and poor earnings.

The committee claimed the decision was based on the rising inflation rate that rose to 21.09% in October. However, given Nigeria’s economic structure and current situation, the persistent increase was mainly to lure foreign investors to invest in the economy against the developed economies that are equally raising rates to curb escalating inflation.

 

New Naira notes

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Naira

President Buhari to Launch New Naira Notes Today

CBN says Buhari is expected to introduce redesigned naira notes to the public today at the Federal Executive Council (FEC) meeting in Abuja.

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President Buhari - Investors King

Nigerian President, Muhammadu Buhari is expected to launch the redesigned naira notes today at the Federal Executive Council (FEC) meeting in Abuja.

The launch will precede the circulation of the affected currency which is billed for December 15, 2022. The FEC meeting is a weekly (Wednesday) meeting of the executive arm of government often presided over by the President or the Vice President.

The Central Bank Governor, Godwin Emefiele disclosed on the sidelines of the Monetary Policy Committee (MPC) meeting held in Abuja on Tuesday, that the new naira notes will be displayed for public view on Wednesday. 

Therefore, the governor added that the CBN will not shift its deadline for all old notes to be returned to commercial banks in exchange for newly designed ones.

Investors King recalls that in October 2022, the central bank announced it will issue redesigned N200, N500, and N1,000 notes, effective December 15, 2022, while the new and existing currencies will remain legal tender and circulate together until January 31, 2023.

However, in a sudden change of schedule, the CBN governor noted that the unveiling will be done by the president today stating that the bank will no longer wait till December 15th to unveil and begin to release the new notes.

” By the special grace of God, tomorrow, (today) which is the 23rd of November 2022, the President has graciously accepted to unveil the new currencies and the new currencies will be unveiled tomorrow at the Federal Executive Chamber by 10am.” Emefiele started.

Meanwhile, the Monetary Policy Committee (MPC) which is the highest decision-making body for any issues related to Nigerian monetary policy has hiked the interest rates from 15.5 percent to 16.5 percent. 

According to CBN, the hike in interest rate is to curtain inflation and maintain economic stability. 

Speaking at the end of a two-day Monetary Policy Committee meeting yesterday, the CBN governor noted that the MPC voted to retain the cash reserve ratio at 32.5 percent and the liquidity ratio at 30 percent.

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