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Forex Weekly Outlook August 22 – 26

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Swiss Coins And Banknotes As The Swiss Franc Weakens Against Dollar

Global financial markets reacted to comments from US senior Fed officials last week, after a report shows a healthy manufacturing sector with 0.7 percent increase in industrial production and 0.5 percent surge in manufacturing output with a capacity utilization rate of 75.9 percent — the highest since December 2014.

Although, consumer prices came out flat at 0.0 percent as expected, building permits remained moderate with a resilient labor market (unemployment claims of 262,000). This week, investors are looking to an annual meeting of central bankers from around the world in Jackson Hole, Wyoming, at which Fed Chair Janet Yellen is scheduled to speak, for clues on the course of monetary policy. A hawkish outlook will strengthen the dollar as investors are expected to price in the likelihood that the Federal Reserve will raise interest rates in the second half of the year.

In the UK, the first full post-Brexit data shows retail sales jumped to 1.4 percent in July, indicating that low interest rates (0.25%), unemployment rate (4.9%) and inflation rate (0.6%) are supporting consumer spending against the widely predicted post-Brexit doom. Also, it is imperative to note that the drop in the pound exchange rate encouraged tourists to spend more, so it might be too early to decipher the improvement from the usual summer volatility – especially with a better weather like this year. The pound rose 0.9 percent against the US dollar to $1.3183 after the data was released, but quickly retreated following a surge in the odds of the Fed raising rates this year.

In Canada, retail sales plunged 0.1 percent in June to $44.1 billion, but few experts believed spending will rebound in the third quarter – mainly because of the child benefit for lower income and middle income partners due in July. Again, annual inflation rate fell below the Bank of Canada’s 2 percent target to 1.3 percent and short of 1.5 percent expected in July, as lower energy prices weighed on consumer prices and the struggling manufacturing sector. Overall, the Canadian economy is experiencing a lackluster growth, but the recent comments from Saudi Arabia’s Energy Minister Kahlid al-Falih has helped the commodity dependent economy/currency modulate part of its losses.

New Zealand continued to differ speculations even after inflation report disappointed. The economy added more jobs in the second quarter and reduced unemployment from 5.2 percent to 5.1 percent. Even though, the currency is yet to cap its gains so far, the strong US data released last week and the possibility of the Federal Reserve raising rates later in the year, may finally pave the way for the RBZN monetary expansion as explained last week and reinforce sellers’ interest, but a break of 0.6989 support will be needed to validate this bearish stance. Generally, New Zealand economy is solid, and one of the few with room for additional expansion if the need arises.

Australia added 26,200 jobs and reduced its unemployment rate by 0.1 percent to 5.7 percent in July. While the economy is far from its 2 percent inflation target, construction, tourism and education industries have helped keep its unemployment rate at a record low. This week, AUDUSD and EURAUD top my list.

AUDUSD

For a while the Australian dollar has been overpriced, but yet continued to gain against the US dollar and its peers. Last week, sellers jumped on the pair immediately Fed officials signals possibility of the Federal Reserve raising rates later in the year, and break the ascending channel started on May 30. This week, if the markets continue to price in that possibility, the strong dollar will likely weigh on the pair and may finally give us 0.7505 as explained last week. I believe a technical break below the ascending channel should be enough to force traders to start pricing in the 25 basis points cut. This week, I am bearish on this pair as long as 0.7673 resistance holds.

AUDUSDDaily

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EURAUD

This pair has gained 487 pips since Aug 11th, and positioned for even more. Here is why I think this pair may offer buyers opportunity, the Euro-area has shown resilience since the U.K exit the European Union, and has complemented its moderate fundamental with strategic monetary policy. Another reason is the U.K post-Brexit retail sales report released last week, would likely reduce the heavy negativity surrounding the Brexit and boost the business activities of the Euro-area.

EURAUDDaily

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Technically, after breaking 1.4665 resistance on Wednesday, the Thursday’s candlestick that closed as a bullish pin bar on the daily time frame was the first sign of bullish continuation. While the morning start pattern formed on weekly time frame validate this stance. This week, as long as 1.4665 support holds, I am bullish on this pair with 1.5008 as the target. Euro-area manufacturing PMI is due on Tuesday.

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.

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Naira

Dollar to Naira Today January 24, 2022

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Naira Exchange Rates - Investors King

Here is the daily dollar to Naira exchange rates at both the official and black markets today, January 24, 2022.

Read and follow Investors King daily update on the official exchange rate for the dollar as well as Black Market rates, Bureau de Change (BDC) rates and CBN rates.

How Much is Dollar to Naira Exchange Rate Today, January 24, 2022, at the Official Market?

The official exchange rate for $1 dollar to naira = ₦415.64/$1, according to the Central Bank of Nigeria official exchange rates.

However, FMDQ Group forex data puts the dollar to naira exchange rate at ₦416 to $1 on Friday, 21st January 2022. The Investors and Exporters forex platform is yet to be updated today.

How Much is Black Market Exchange Rate for Dollar to Naira Today?

The dollar to naira exchange rate at the unregulated forex market popularly known as the black market is N560 for buyers and sells at N565 today, Monday, January 24, 2022, according to sources cited by Bureau De Change (BDC).

The Central Bank of Nigeria has warned against patronising the black market and directed all Nigerians to visit their banks for their forex needs.

How Much is Bitcoin to Naira Today?

Bitcoin to Naira exchange rate dipped by 0.25 percent in the last 24 hours to N14.630 million while Ethereum [ETH] to Naira stood at N979,245, representing a decline of 3.40 percent.

The entire cryptocurrency plunged in December 2021 after the US Federal Reserve announced plans to adjust its monetary policy to accommodate the change in the nation’s economic realities. Experts are predicting that an increase in interest rate will impact the crypto space as capital inflow is projected to drop.

Meanwhile, the minister of finance Mrs Zainab Ahmed on Monday said the federal government has suspended plans to remove fuel subsidy in 2022 given the nation’s inflation rate.

Speaking at National Assembly, she said  “We discovered that practically, there is still heightened inflation and that the removal of subsidy would further worsen the situation and impose more difficulties on the citizenry,” Ahmed said at the meeting.

“Mr. President does not want to do that. What we are now doing is to continue with the ongoing discussions and consultations in terms of putting in place a number of measures.

“One of these include the roll-out of the refining capacities of the existing refineries and the new ones which would reduce the amount of products that would be imported into the country.”

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Naira

Naira Slides Marginally Against US Dollar, Exchanges at N415

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Naira Exchange Rates - Investors King

The Nigerian Naira fell slightly against the United States Dollar on Monday, according to the last update from the Central Bank of Nigeria.

The local currency was exchanged at N414.89 per dollar on Friday before depreciating by N0.11 or 0.03 percent to N415 on Monday.

It should be recalled that the Naira plunged to N435 against the United States on Friday 31, December 2021 when the Central Bank of Nigeria (CBN) adjusted its exchange rate by N2 to accommodate the change in Nigeria’s economic realities.

The Naira has now improved by about 4.6 percent against the United States Dollar from the year to date. The improvement was after the market digested and interpreted the CBN action as the usual forex devaluation in line with the apex bank policy.

At the unregulated black market, traders in Abuja sold the greenback at N570 a unit and buy it at N569. CBN had attributed Nigeria’s forex challenges to the activities of black market operators and warned Nigerians to stop patronising that section of forex.

Meanwhile, the crypto space remained bearish across the board ahead of US Federal Reserve rate decisions. Bitcoin to Naira exchange rate declined by 2.5 percent to N17.346 million in the last 24 hours while Eth shed 3.6 percent.

Other cryptocurrencies suffer the same fate as Binance coin, Tether, Cardano and XRP depreciated by 3.70 percent, 0.31 percent, 1.72 percent and 2.93 percent.

Bitcoin looks vulnerable above the $41,000 support level, largely due to the drop in capital inflow into the crypto space ahead of a possible interest rate increase in the world’s largest economy, the United States.

Bitcoin continues to look vulnerable having failed to bounce back strongly off the recent lows. It appeared to be gathering some upside momentum at times last week but it quickly ran into resistance just shy of $45,000 where it had previously seen support. All eyes are now on $40,000 and whether we’re going to see another run at that major support level,” said Craig Erlam, Senior Market Analyst, UK & EMEA, OANDA, in an email to Investors King.

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Naira

Naira Gains 1.58 Percent to N416 at Official FX Market, Bitcoin, Other Cryptocurrencies Plunge

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Naira Dollar Exchange Rate - Investors King

The Nigerian Naira gained 1.58 percent or N7.56 against the United States Dollar at the official forex market on Wednesday.

The local currency opened the day at N423.56 to a US Dollar before improving in value to N416 against the greenback. At the official forex window managed by the FMDQ Group, investors traded $114.95 million on Wednesday.

The improvement in Naira value was after the market had digested the Central Bank of Nigeria’s currency adjustment. The central bank had adjusted the Naira to Dollar exchange rate by N2 from N411 to N413 on Friday, leading to devaluation outcry across Africa’s largest economy.

On Friday, the Naira plunged to as low as N435 against the United States Dollar at the official forex trading market and N575 at the unregulated parallel market, popularly known as the black market, before moderating to N416.

Meanwhile, bitcoin and other cryptocurrencies plunged across the board. Bitcoin depreciated by 7.16 percent to $43,058 per coin in the last 24 hours. The decline does not stop there as the second most capitalised digital asset, Eth dipped by 9.77 percent to $3,441.

Solana, Ripple (XRP), Luna and Cardano (ADA) lost 11.48 percent, 8.13 percent, 9.5 percent and 8.6 percent, respectively.

The decline was after the US Federal Reserve minutes of December 14 – 15 meeting released on Wednesday revealed that policymakers are planning to raise interest rates as early as March 2022 to curb escalating inflation rate. Generally, hawkish monetary policy is negative for cryptocurrency as it drags on capital inflow into the space and encourages investors to look into more stable assets for higher interest rates.

According to The Wall Street Journal, the “Federal Reserve officials at their meeting last month eyed a faster timetable for raising interest rates this year, potentially as soon as in March, amid greater discomfort with high inflation.

“Minutes of their Dec. 14-15 meeting, released Wednesday, showed officials believed that rising inflation and a very tight labor market could call for lifting short-term rates “sooner or at a faster pace than participants had earlier anticipated.”

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