Forex

Forex Weekly Outlook August 1 – 5

Published

8 years ago

July 31, 2016

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.

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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.

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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.

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Samed Olukoya

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

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Forex

Investors in Turmoil as Zimbabwe’s New Currency Wipes Out 330% Stock Market Gain

Published

4 hours ago

April 23, 2024

Samed Olukoya

Zimbabwe’s financial landscape has been rattled by the introduction of the new currency ZiG, spelling trouble for investors who had sought refuge in the stock market amidst economic turmoil.

The Zimbabwe Stock Exchange (ZSE) All Share Index has plummeted by 99.95% since the rollout of ZiG on April 5. This has erased more than 330% gain recorded earlier this year.

The introduction of ZiG, short for Zimbabwe Gold, was intended to provide stability to the country’s currency and succeed the embattled Zimbabwean dollar, which had already lost 80% of its value in 2024 alone.

However, instead of instilling confidence, the new currency has sent shockwaves through the stock market, leaving investors grappling with the fallout.

Prior to the currency conversion, investors had flocked to the stock market as a safe haven amid the Zimbabwean dollar’s depreciation and soaring inflation rates, which had reached a seven-month high of 55.3% in March.

However, the abrupt introduction of ZiG has reversed their fortunes, plunging share prices and trading volumes as the market grapples with the transition.

Justin Bgoni, the CEO of the Zimbabwe Stock Exchange, attributed the market’s poor performance to a combination of factors, including delays in currency conversion by financial institutions and tight liquidity conditions.

He noted that investors were also hesitant and uncertain about the value of assets denominated in ZiG terms, further exacerbating the situation.

The conversion of share prices from the old currency to ZiG at a swap rate of 1 ZiG to 2,498 Zimbabwean dollars has led to a significant decline in trading volumes and revenues for brokerage firms.

Lloyd Mlotshwa, head of research at Harare-based brokerage IH Securities, highlighted that brokerages have experienced a substantial hit to earnings, with some seeing their revenues drop by at least 50%.

Stockbrokers in the capital, Harare, described the current market conditions as “a painful early winter,” marked by limited trading volumes and uncertainty. They anticipate broader ramifications across the stock market architecture, affecting not only stockbrokers but also custodians, government taxes, and the Zimbabwe Stock Exchange itself.

Enock Rukarwa, a research and investment consultant at FBC Securities, said stockbroking boutiques need to adapt their business models to mitigate the impact on commission income and pointed out that the majority of the economy still transacting in US dollars.

He suggested that stockbroking boutiques need to adapt their business models to mitigate the impact on commission income.

Imara Asset Management, Zimbabwe’s largest independent brokerage overseeing $100 million in assets, warned of further upheaval in the coming months as share prices adjusted to ZiG.

The company’s CEO and CIO, John Legat and Shelton Sibanda, criticized the decision to adopt ZiG instead of US dollars, considering that many listed businesses operate in USD.

Naira

Dollar to Naira Black Market Today, April 23rd, 2024

Published

5 hours ago

April 23, 2024

Samed Olukoya

As of April 23rd, 2024, the exchange rate for the US dollar to the Nigerian Naira stands at 1 USD to 1,250 NGN in the black market, also referred to as the parallel market or Aboki fx.

For those engaging in currency transactions in the Lagos Parallel Market (Black Market), buyers purchase a dollar for N1,290 and sell it at N1,280 on Monday, April 22nd, 2024 based on information from Bureau De Change (BDC).

Meaning, the Naira exchange rate improved when compared to today’s rate below.

This black market rate signifies the value at which individuals can trade their dollars for Naira outside the official or regulated exchange channels.

Investors and participants closely monitor these parallel market rates for a more immediate reflection of currency dynamics.

How Much is Dollar to Naira Today in the Black Market?

Kindly be aware that the Central Bank of Nigeria (CBN) does not acknowledge the existence of the parallel market, commonly referred to as the black market.

The CBN has advised individuals seeking to participate in Forex transactions to utilize official banking channels.

Black Market Dollar to Naira Exchange Rate

Buying Rate: N1,250
Selling Rate: N1,240

Naira

Dollar to Naira Black Market Today, April 22nd, 2024

As of April 22nd, 2024, the exchange rate for the US dollar to the Nigerian Naira stands at 1 USD to 1,290 NGN in the black market, also referred to as the parallel market or Aboki fx.

Published

1 day ago

April 22, 2024

Samed Olukoya

As of April 22nd, 2024, the exchange rate for the US dollar to the Nigerian Naira stands at 1 USD to 1,290 NGN in the black market, also referred to as the parallel market or Aboki fx.

For those engaging in currency transactions in the Lagos Parallel Market (Black Market), buyers purchase a dollar for N1,100 and sell it at N1,090 on Friday, April 19th, 2024 based on information from Bureau De Change (BDC).

Meaning, the Naira exchange rate declined when compared to today’s rate below.

This black market rate signifies the value at which individuals can trade their dollars for Naira outside the official or regulated exchange channels.

Investors and participants closely monitor these parallel market rates for a more immediate reflection of currency dynamics.

How Much is Dollar to Naira Today in the Black Market?

Kindly be aware that the Central Bank of Nigeria (CBN) does not acknowledge the existence of the parallel market, commonly referred to as the black market.

The CBN has advised individuals seeking to participate in Forex transactions to utilize official banking channels.