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Dollar Boosted by Hawkish Fed Comments as Oil Drops With Gold

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Dollar Naira

The dollar strengthened versus all of its major peers as hawkish comments from a Federal Reserve official boosted the likelihood of a U.S. interest-rate increase this year. The yen’s retreat was spurred by prospects for further monetary easing in Japan, while oil dropped with gold.

Dollar index rose to a one-week high after Fed Vice Chairman Stanley Fischer said Sunday the U.S. economy is already close to meeting the central bank’s goals and that growth will pick up. The yen fell for a second day and Japanese stocks advanced after Bank of Japan Governor Haruhiko Kuroda flagged the possibility that the authority’s unprecedented monetary stimulus will be added to in September. Elsewhere in Asia, most shares declined as oil fell to about $48 a barrel. Silver led losses among precious metals.

Global markets have been buffeted by comments from Fed officials flagging the possibility of higher borrowing costs as early as next month, even though minutes of the central bank’s last meeting struck a more dovish tone. The focus will shift to Janet Yellen’s speech this week in Jackson Hole, Wyoming, where top global central bankers will gather for a meeting. Futures traders on Friday assigned a 22 percent probability to a September rate increase by the Fed, up from 16 percent a week earlier.

“Janet Yellen’s speech on Friday will have the biggest impact on short-term market moves, especially if she follows in Stanley Fischer’s relatively hawkish tone,” said Angus Nicholson, a market analyst at IG Ltd. “A week of talking up the U.S. dollar will be good for U.S. financial stocks that would benefit from a rate rise and some of that positivity could spread over into financials globally.”

Currencies

Dollar Spot Index rose 0.4 percent as of 11:16 a.m. Tokyo time, after losing ground in each of the last two weeks. South Korea’s won fell 0.8 percent versus the greenback and New Zealand’s dollar lost 0.7 percent, the biggest declines among 16 major currencies.

“We expect the dollar to consolidate this week with a modest upside bias,” said Elias Haddad, a senior currency strategist at Commonwealth Bank of Australia in Sydney. “There is room for U.S. interest-rate expectations to adjust a bit higher this week.”

The yen dropped 0.5 percent to 100.73 per dollar. Kuroda told the Sankei newspaper that the BOJ is conducting a comprehensive review of Japan’s economy and finances and said there is “sufficient chance” of more easing at next month’s policy meeting. Softer July inflation data this Friday may raise odds for more aggressive BOJ easing, Haddad said.

Forwards on India’s rupee were little changed after India named Urjit Patel to take over from Raghuram Rajan as central bank governor from Sept. 4.

Stocks

Japan’s Topix index added 0.5 percent as the yen’s decline boosted exporters including Toyota Motor Corp., which was headed for its highest close since March.

About three stocks fell for every two that rose on the MSCI Asia Pacific excluding Japan Index, with raw-materials producers leading losses among 10 industry groups. South Korea’s Kospi index slipped from a 13-month high as foreign investors pulled funds from the securities for the first time in a week, while Taiwan’s benchmark was set for its lowest close in a month. Hong Kong’s Hang Seng Index rose 0.1 percent, after retreating from a nine-month high on Friday.

Futures for the S&P 500 Index fell 0.1 percent after the gauge ended last week within 0.3 percent of an all-time high. Pfizer Inc. is close to an agreement to buy Medivation Inc. for about $14 billion and a deal may be announced as early as Monday, according to people familiar with the situation.

Commodities

Crude oil declined 1.1 percent to $48.01 a barrel in New York after Iraq, OPEC’s second-biggest producer, said it will boost exports by about 5 percent amid a glut of supply. The price jumped 9.1 percent last week on speculation that OPEC talks next month could lead to an output freeze. U.S. drillers added rigs for an eighth week, the longest run since April 2014, Baker Hughes Inc. data show.

Silver dropped as much as 3 percent to a seven-week low, while gold was down 0.6 percent amid the dollar’s advance. Silver has rallied 37 percent this year while gold jumped 26 percent as the Fed refrained from tightening and other central banks embraced negative rates, benefiting bullion which doesn’t pay interest.

Bonds

U.S. Treasuries due in a decade fell, pushing their yield up by one basis point to 1.59 percent. The yield could climb toward 1.70 percent if Yellen’s remarks are along the lines of those made by Fischer when she delivers her address on Friday, according to Su-Lin Ong, a senior economist at Royal Bank of Canada in Sydney.

“The market is clearly susceptible to Yellen making similar comments in Jackson Hole,” Ong said. “The most recent lot of Fed speakers — and these are key speakers — have signaled that the market should be putting a greater weight on the risk of a move before year-end.”

Australia’s 10-year bond yield increased by five basis points to 1.91 percent and Japan’s rose by one basis point to minus 0.08 percent.

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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