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Forex Weekly Outlook August 8 – 12

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The US labor market added stunning 255,000 jobs to the payrolls in July, even with an uninspiring 1.2 percent second quarter GDP growth rate and weaker than expected orders. The labor market doesn’t seem to be slowing down anytime soon. Both wages and average work week also surged in July, confirming the strength of the jobs created as it cuts across manufacturing, healthcare, retails, temporary-help agencies and leisure and hospitality industries.

Even though, the unemployment rate remains low at 4.9 percent in July. The General concerns remain the divergence between the US labor market and the economic growth rate. While labor market is skyrocketing, the economic growth is below 2.6 percent expected by economists in the second quarter — raising questions about the US economic outlook in 2016, if it will be enough to raise rates this year.

Nevertheless, the US dollar gained part of its losses against all its counterparts on Friday.

In the United Kingdom, the Bank of England cut rates by 25 basis points to record low on Thursday and extends stimulus to safe the economy from the aftermath of the Brexit. The pound has since lost about 1.7 percent against the dollar to 1.3061.

While the Reserve Bank of Australia also lowered its official cash rate by 25 basis points to contain surging Aussie dollar and boost exports as explained last week, but sadly the local currency continued to gain against the US dollar after investors abandoned the greenback for the Japanese yen prior to the job report released on Friday. Prompting economists to think the RBA will have to do more to get its consumer prices up.

This week, the Reserve Bank of New Zealand is widely expected to cut rates by at least 25 basis points from current 2.5 percent to 2 percent on Thursday, and another 25 basis points in November to 1.75 percent if Kiwi gains must be capped and inflation target met.  The RBNZ Governor Graeme Wheeler said earlier that the higher exchange rate is damping the growth outlook and that action will be taken as deem appropriate.

In Canada, a total of 31,200 jobs were lost in July and trade balance deficit dipped to 3.6 billion in June, more than 2.6 billion expected, while the unemployment rate rose to 6.9 percent. The Canadian dollar tumbled the most since June on Friday, after the nation’s labor market showed the most jobs were lost since November 2015. Yes, things are not looking good for the loonie, especially with weak consumer spending, weak manufacturing sector and falling oil prices.

This week, EURUSD, USDCAD, USDCHF and AUDUSD top my list.

EURUSD

For the past six weeks this pair has top my list, largely because the greenback is the most balanced currency with clear cut policies to envisage future occurrences. While Euro-single currency has struggled since the U.K. exit the European Union, currently the Euro-manufacturing sector is moderately okay but the risks in the region outweigh its offering investment wise. Another reason why I think this pair could offer a substantial sell opportunity is positive US non-farm payrolls report, what we want to do is ride the sentiment as it becomes clearer.

EURUSDWeekly

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Not forgetting, that even at dollar worse moments last week, the Euro-single currency has failed to gain enough against the US dollar to cross the ascending channel started in November to confirm a bullish continuation. So this week, I remain bearish on the EURUSD with 1.0821 as the target, provided 1.1233 resistance holds.

USDCAD

Last week I mentioned the USDCAD and the possibility of what it holds, this week I remain bullish on this pair after breaking 1.3142 resistance amid dwindling Canadian employment rate.  The double bottom formed by the last two candlesticks last week aligned with the higher-lows trend line, a technical break above 1.3142 will confirm our bullish continuation. As long as price remains above 1.3142, I am bullish on USDCAD with a 1.3387 target.

USDCADDaily

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USDCHF

Last week, I explained the viability of the USDCHF following the decision of the Swiss National Bank (SNB) to intervene in the forex market. Since my last analysis the USDCHF has gained 89 pips to close at 0.9809.

USDCHFWeekly

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This week, I remain bullish on USDCHF because the new found strength of the US labor market will likely continue to pressure this pair as investors struggle to decipher the situation with SNB, I believe a sustained break of 0.9843 resistance will open 1.0000 parity level, then our target 2 at 1.0093.

USDCHFDaily

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To read AUDUSD analysis click here

Last Week Recap

The GBPJPY lost 199 pips to close at 132.93 on Friday — below the long established downward trend line and short of our 129.86 target. This week I am bearish on GBPJPY with 129.86 as the target.

GBPJPYDaily

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USDJPY

This pair lost 139 pips before the US dollar gained back part of its losses to the Japanese yen to closed at 101.77, this week I am standing aside on this pair.

USDJPYDaily

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For update on AUDUSD pair click here.

 

 

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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