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Forex Weekly Outlook September 5 – 9

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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

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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Forex

CBN Goes After Abokifx, Freezes Bank Accounts for Publishing Black Market Rates

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Abokifx - Investors King

The Central Bank of Nigeria (CBN) has directed deposit money banks to freeze all the bank accounts associated with AbokiFX and its owner, Oniwinde Olusegun Adedotun, for publishing foreign exchange rates other than the rates determined by the CBN.

The apex bank had warned publishers to desist from publishing forex rates determined by the unregulated parallel market, popularly known as the black market, where speculators and hoarders largely manipulate the nation’s foreign exchange rates as seen in recent weeks.

In an email to publishers by the NGN Project, presumably acting on behalf of the CBN, the organisation had quoted section 11 sub-section 1(c) and 2 (a,b) of the National Economic Intelligence Committee Act of 2004 that stated “it shall be an offence for any person, association of individuals or body corporate (whether public or private) to publish or cause to be published exchange and interest rates other than the rates determined by the Bank from time to time.”

The Act stipulated N100,000 fine or imprisonment for a term of two years or both for individual and N500,000 fine and suspension or revocation of certificate of registration or cerificate of incorporation for association or individuals or corporate body.

This was after the central bank halted the sale of forex to bureau de change operators after accussing them of aiding the activities of criminals at the unregulated black market and been a channel for illicit financial flow. The move, which resulted in chronic forex scarcity and all time high foreign exchange rate, has forced the apex bank to go after publishers in effort to discourage people from patronising the black market and to force Nigerians to reject the unreason exchange rate of N567 to a United States Dollar and approach their banks for N412 to N415 per US Dollars.

Despite covid-19 challenges and limited forex generation, the apex bank has continued to support the Nigerian Naira and go after forex manipulators.

The NGN Project had described AbokiFX.com and its owner has criminals ‘committing crimes against the Nigerian state’. See the email CBN sent to publishers below.

 

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Naira

Naira Exchange Rates Today, Thursday, September 16, 2021

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Naira - Investors King

Naira continued its downward trend against other currencies on Thursday as it plunged to N565 against the United States Dollar at the black market. The local currency traded at N765 and N650 to British Pound and Euro, respectively.

Persistent forex scarcity amid a series of in effective policies have made access to forex impossible for most of businesses that operates in largely import dependent African biggest economy.

Nigeria’s forex reserves, the means in which the nation, service its dollar consuming 200 million population has been on a decline in recent weeks despite crude oil trading at over a year high of $73 a barrel. Some of the factors that have crippled the ability of central bank to cushion the economy with enough forex is low crude oil production, partly due to production cap, weak local manufacturing sector that has made the nation a huge import dependent economy, the ongoing crisis between herders and farmers, rising costs even with falling inflation, etc.

At the bureau de change section, Naira exchanged at N555, N765 and N645 to a United States Dollar, British Pound and Euro common currency.

The Central Bank of Nigeria (CBN) had stopped the sale of forex to the bureau de change operators to plug forex leakages and curb activities of criminal elements, the decision has worsen forex availability. See other forex rates 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
16/09/2021 557/565** 758/765** 640/650** 70/75 430/440 310/330
15/09/2021 552/562 754/760 640/648 70/75 430/440 310/330
14/09/2021 550/557 754/760 640/645 70/75 430/440 310/330
13/09/2021 543/550 742/750 630/636 70/75 425/435 310/330
10/09/2021 538/545 738/745 630/636 70/75 420/432 310/330
09/09/2021 532/540 730/740 627/632 70/76 419/430 310/330
08/09/2021 528/535 723/730 623/629 70/75 419/426 310/330

Bureau De Change Naira Rates

Date USD GBP EURO
NGN BUY/SELL BUY/SELL BUY/SELL
16/09/2021 548/555 753/765 635/645
15/09/2021 548/555 750/761 635/645
14/09/2021 548/555 750/761 635/645
13/09/2021 535/550 737/745 630/636
11/09/2021 530/547 735/745 630/635
10/09/2021 530/547 735/745 630/635
09/09/2021 528/538 730/738 625/630
08/09/2021 525/531 718/730 616/625

Central Bank of Nigeria’s Official Naira Rates

N.B: These tables are updated three times a day.

 

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Naira

Dollar to Naira Exchange Rate Today, Tuesday, September 14, 2021

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Naira Notes - Investors King

Naira extended its decline on Tuesday as it hits N557 against the United States Dollar at the parallel market, popularly called the black market.

The local currency exchanged at N557 to a United States Dollar at the black market, representing an all-time record low against the greenback. Against the British Pound and the Euro common currency, the Naira slid to N760 and N645, respectively.

Africa’s largest economy is enmeshed in low forex liquidity caused by poor economic structure that over the years has limited and weakened the nation’s foreign revenue generation. This weak foreign revenue generation has impeded Nigeria, a largely import dependent economy, from effectively servicing her economy with necessary forex for economic activities.

The inability to service the economy with enough forex coupled with the decision of the Central Bank of Nigeria to halt the sale of forex to Buruea De Change Operators have compounded Nigeria’s forex situation and further disrupted the Naira’s outlook.

Still, the apex bank continues to post its inaccessible official rates as shown in the table below. Despite insisting that exchange rates are stipulated Central Bank of Nigeria’s rates, many Nigerians and businesses operating in the country find it hard or impossible to access forex at the central bank’s rates.

The Central Bank of Nigeria sells U.S Dollar at N410.51, while the British Pound and Euro are sold at N568.1869 and N483.6629, respectively.

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
14/09/2021 550/557 754/760 640/645 70/75 430/440 310/330
13/09/2021 543/550 742/750 630/636 70/75 425/435 310/330
10/09/2021 538/545 738/745 630/636 70/75 420/432 310/330
09/09/2021 532/540 730/740 627/632 70/76 419/430 310/330
08/09/2021 528/535 723/730 623/629 70/75 419/426 310/330

Bureau De Change Naira Rates

Date USD GBP EURO
NGN BUY/SELL BUY/SELL BUY/SELL
14/09/2021 548/555 750/761 635/645
13/09/2021 535/550 737/745 630/636
11/09/2021 530/547 735/745 630/635
10/09/2021 530/547 735/745 630/635
09/09/2021 528/538 730/738 625/630
08/09/2021 525/531 718/730 616/625

Central Bank of Nigeria’s Official Naira Rates

N.B: These tables are updated three times a day.

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