Connect with us

Forex

Forex Weekly Outlook September 5 – 9

Published

on

forex

The U.S dollar was rattled last week by a series of weak economic data released towards the end of the week, the nonfarm payrolls report came out less than expected at 151,000 in August from 255,000 recorded in July, and this couple with weak productivity from the manufacturing sector (49.4) alerted the markets to the likelihood of the Federal Reserve relinquishing on its rate decision this year. This is because during the Jackson Hole speech, the Fed Chair Janet Yellen said if the economy continues to improve and productivity pick up that the Federal Open Market Committee will look into tightening interest rates, otherwise the FOMC will continue to monitor growth and acted only when necessary.

Nevertheless, the US trade deficit narrowed 11.6 percent in June to $39.47 billion in July, while imports dropped 0.8 percent and exports rose 1.9 percent. The improvement in exports was largely due to increased overseas orders of foods, feeds and beverages — especially soybeans. Meaning, it’s more likely to reverse going forward, but it will support third quarter overall growth.

While, some have argued that it is too early to deduce the Fed stance, the average hourly earnings says otherwise, for instance with unemployment near all-time low, average earnings shouldn’t be declining even if the unemployment rate (4.9%) drop. This for me signals the economy is recovering, not recovered yet. That I think the FOMC will like to see through, before tightening monetary policy.

The Japanese economy is probably the most affected by the weak US job report and here is why, the data released on Tuesday showed that household earnings increased and retail sales improved significantly amid moderate unemployment rate, although industrial output (49.5) and capital spending (3.1) are still weak due to weak oversea orders — the whole economy remained vibrant. This improvement is expected to  rekindle the Japanese yen attractiveness as a haven asset, especially now that the weak nonfarm payrolls has substantially dent the odds of the Fed’s raising rates this year.

However, the increase in demand for the Japanese yen will worsen industrial output and exports, and prompts the Bank of Japan Governor Haruhiko Kuroda to reassess its limited monetary policy if manufacturing sector and sustained job creation are priorities.

In the UK, the economy has rebounded from Brexit pitfall, with business confidence on the rise. The purchasing manager index that hit record low amid Brexit growing concerns in July has gained back all the lost ground as companies have started hiring and overseas orders surged. This increase in shipment was as a result of the weak pound. So it is nimble to note that the fall in the value of the pound is also pushing up manufacturer’s cost of production and inflation as Britons needs more money to buy imported goods.

In the long term, this is a bit mixed, one, because market sentiment is volatile and this could be an overshoot upwards PMIs that needs to be cautiously watch. Two, if consumer prices start rising now, further stimulus from the Bank of England may not crystallize. On this note, EURGBP, USDCAD and GBPCHF top my list this week.

EURGBP

Since June 24, speculators have substantially driven this pair to over 3-year high. But the UK economy remains unperturbed by the negative business sentiment the Brexit decision generated and has gained 349 pips since August 16 when the first complete post-Brexit economic report was released. Another reason why I think EURGBP is a good sell, is the fact that the U.K positive economic data and the sentiment generate by the releases will revamp its currency’s outlook, while euro-area weak economic data will continue to weigh on the single currency for now.

EURGBPDaily

Click to enlarge

If EURGBP sustained the breach of 0.8391 support, this will likely attract sellers’ interest this week and open up 0.8240 support level, our first target this week. As long as the price remained below 0.8448 resistance I am bearish on this pair.

USDCAD

After the Organization of the Petroleum Exporting Countries announced its willingness to discuss steps on how to cap production at its meeting this month in Algeria, global oil prices jumped. So did currencies of commodity dependent economies. The Canadian dollar consolidated for two days with a double gravestone doji before finally gaining back 50 percent of what it has lost since the odds of the Fed’s raising rates bolster the dollar.

USDCADDaily

Click to enlarge

This week, as long as price remains below 1.3033 resistance I am bearish on this pair with 1.2849 as the target, a sustained break of 1.2849 should give us 1.2674 provided OPEC go through with their promise and Fed’s position rates settled. forex is maintained

GBPCHF

The Swiss Franc like Euro single currency has lost 639 against since August 16th as explained above. Last week, Switzerland’s retail sales fell 2.2 percent in July after previously plunging 3.5 percent in June.

GBPCHFDaily

Click to enlarge

A sustained break of 1.3034 resistance will likely open up 1.3332, but if the inflation and GDP report due this week came out better than expected. This pair will pull back. Until then I am bullish on GBPCHF with 1.3332 as the target. forex target is defined

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.

Continue Reading
Comments

Naira

Naira’s Recent Gain Reflects Policy Direction, Says CBN Chief Olayemi Cardoso

Published

on

Naira Exchange Rates - Investors King

Olayemi Cardoso, Governor of the Central Bank of Nigeria (CBN), has explained that the recent surge in the Naira is a testament to the positive direction of government policies rather than active intervention to defend the currency’s value.

Addressing attendees at the spring meetings of the International Monetary Fund and World Bank in Washington, Governor Cardoso underscored that the CBN’s intention is not to artificially prop up the Naira.

He clarified that the fluctuations observed in the country’s foreign exchange reserves were not aimed at defending the currency but rather aligning with broader economic goals.

Over the past month, the Naira has experienced a notable uptick in value against the dollar, signaling a reversal from previous declines. Data from Bloomberg reveals a 6.4% decrease in liquid reserves since March 18, coinciding with the Naira’s rebound.

Despite this decline, Cardoso pointed out that around $600 million had flowed into the reserves in the past two days, reflecting confidence in the Nigerian market.

Governor Cardoso articulated the CBN’s vision of a market-driven exchange rate system, emphasizing the importance of allowing market forces to determine exchange rates through willing buyers and sellers.

He expressed optimism about a future where the central bank’s intervention in the foreign exchange market would be minimal, except in extraordinary circumstances.

The recent resilience of the Naira follows a period of volatility earlier in the year, marked by a substantial devaluation in January. Since then, the CBN has implemented measures to stabilize the currency, including monetary tightening and initiatives to enhance dollar liquidity.

Cardoso highlighted the transformation in market sentiment, noting that investors now perceive Nigeria’s central bank as committed to stabilizing inflation and fostering economic stability.

As Nigeria continues its journey toward economic recovery and stability, Cardoso’s remarks provide insight into the central bank’s strategy and its impact on the country’s currency dynamics.

Continue Reading

Naira

Dollar to Naira Black Market Today, April 18th, 2024

As of April 18th, 2024, the exchange rate for the US dollar to the Nigerian Naira stands at 1 USD to 1,020 NGN in the black market, also referred to as the parallel market or Aboki fx.

Published

on

New Naira Notes

As of April 18th, 2024, the exchange rate for the US dollar to the Nigerian Naira stands at 1 USD to 1,020 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 N1,050 and sell it at N1,040 on Wednesday, April 17th, 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: N1,020
  • Selling Rate: N1,010

Continue Reading

Naira

Naira’s Upsurge Strains Nigeria’s Foreign-Exchange Reserves

Published

on

New Naira notes

As the Nigerian Naira continued to rebound from its record low against its global counterparts, the nation’s foreign exchange reserves has been on the decline, according to the data published by the Central Bank of Nigeria (CBN) on its website.

CBN data showed liquid reserves have plummeted by 5.6% since March 18 to $31.7 billion as of April 12, the largest decline recorded over a similar period since April 2020.

The recent surge in the Naira follows a series of measures implemented by the Central Bank to liberalize the currency market and allow for a more flexible exchange rate system.

These measures included devaluing the Naira by 43% in January and implementing strategies to attract capital inflows while clearing the backlog of pent-up dollar demand.

Charles Robertson, the head of macro strategy at FIM Partners, acknowledged the Central Bank’s efforts to restore the Naira to a realistic exchange rate, suggesting that it aims to stimulate investment in the local currency and enhance liquidity in the foreign exchange market.

Despite the rapid depletion of foreign-exchange reserves, Nigeria still maintains a significant cushion, bolstered by a rally in oil prices and inflows from multilateral loans.

Gross reserves of approximately $32.6 billion provide coverage for about six months’ worth of imports, according to the International Monetary Fund.

The Central Bank’s disclosure last month that it had cleared a backlog of overdue dollar purchase agreements, estimated at $7 billion since the beginning of the year, indicates progress in addressing longstanding currency challenges.

However, uncertainties remain regarding the extent of dollar debt retained by the Central Bank as revealed by its financial statements late last year.

Furthermore, the decline in foreign-exchange reserves persists despite a surge in inflows into Nigeria’s capital markets, driven by interest rate hikes and increased attractiveness of local debt.

Foreign portfolio inflows exceeded $1 billion in February alone, contributing to a total of at least $2.3 billion received so far this year, according to central bank data.

Analysts remain cautiously optimistic about the trajectory of Nigeria’s foreign-exchange reserves, anticipating stabilization or potential growth fueled by anticipated inflows from Afreximbank, the World Bank, and potential eurobond issuance.

Also, the resurgence of oil prices and the expected return of remittances through official channels offer prospects for replenishing reserves in the near future.

Continue Reading
Advertisement




Advertisement
Advertisement
Advertisement

Trending