Forex

Forex Weekly Outlook September 5 – 9

Published

8 years ago

September 4, 2016

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.

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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.

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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.

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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

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Samed Olukoya

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.

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Naira

Dollar to Naira Black Market Today, April 24th, 2024

As of April 24th, 2024, the exchange rate for the US dollar to the Nigerian Naira stands at 1 USD to 1,260 NGN in the black market, also referred to as the parallel market or Aboki fx.

Published

20 hours ago

April 24, 2024

Samed Olukoya

As of April 24th, 2024, the exchange rate for the US dollar to the Nigerian Naira stands at 1 USD to 1,260 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 N1,250 and sell it at N1,240 on Tuesday, April 23rd, 2024 based on information from Bureau De Change (BDC).

Meaning, the Naira exchange rate declined slightly 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: N1,260
Selling Rate: N1,250

Naira

Nigeria’s Naira Dips 5.3% Against Dollar, Raises Concerns Over Reserve Levels

Published

22 hours ago

April 24, 2024

Samed Olukoya

Nigerian Naira depreciated by 5.3% against the US dollar as concerns over declining foreign reserves raise questions about the central bank’s ability to sustain liquidity.

The local currency has now declined for the third consecutive day since the Naira retreated from its three-month high on Friday shortly after Bloomberg pointed out that the Naira gains were inversely proportional to foreign reserves’ growth.

According to data from Lagos-based FMDQ, the naira’s value dropped precipitously, halting its recent impressive performance.

The unofficial market saw an even steeper decline of 6%, extending the currency’s retreat over the past three trading days to a staggering 17%.

Abubakar Muhammed, Chief Executive of Forward Marketing Bureau de Change Ltd., expressed concerns over the sharp decline, highlighting the insufficient supply of dollars in the market.

Muhammed noted that despite a 27% increase in traded volume at the foreign exchange market on Monday, the supply remained inadequate, forcing the naira to soften further while excess demand shifted to the unofficial market.

The dwindling foreign exchange reserves have been a cause for alarm, with Nigeria’s gross dollar reserves steadily declining for 17 consecutive days to reach $32 billion as of April 19, the lowest level since September 2017.

This worrisome trend has raised questions about the adequacy of dollar inflows to rebuild reserves, especially after the central bank settled overdue dollar obligations earlier in the year.

Samir Gadio, Head of Africa Strategy at Standard Chartered Bank, pointed out that while the naira had been supported by onshore dollar selling, the rally was likely overextended.

Gadio warned that the emergence of a dislocation in the market, with domestic participants selling dollars at increasingly lower spot levels was unsustainable and necessitated a correction.

The central bank’s efforts to stabilize the naira have been evident with interventions aimed at improving liquidity.

However, the effectiveness of these measures remains uncertain, particularly as the central bank offered dollars to bureau de change operators at a rate 17% below the official rate tracked by FMDQ.

Analysts, including Ayodeji Dawodu from Banctrust Investment Bank, foresee further challenges ahead, predicting that the naira will likely stabilize around 1,500 against the dollar by year-end.

Dawodu emphasized the importance of stabilizing the currency to attract strong foreign capital inflows, underscoring the significance of sustainable monetary policies in Nigeria’s economic recovery.

As Nigeria grapples with the repercussions of the naira’s depreciation and declining foreign reserves, policymakers face mounting pressure to implement measures that ensure stability and foster confidence in the economy.

The road ahead remains uncertain, with the fate of the naira intricately tied to Nigeria’s ability to address underlying economic vulnerabilities and bolster investor trust.

Naira

CBN Sells Fresh Dollar to BDCs at N1,021/$

Published

2 days ago

April 23, 2024

Samed Olukoya

The Central Bank of Nigeria (CBN) has once again initiated direct sales of dollars to licensed Bureau De Change (BDC) operators across the country.

The latest circular from the apex bank announces the sale of $10,000 to each BDC at a rate of N1,021 per dollar.

This is the second round of such sales this month and the fourth in the current year.

The directive mandates BDCs to sell the allocated dollars to eligible end-users at a spread not exceeding 1.5 percent above the purchase price, translating to a maximum selling price of N1,036.15 per dollar.

Addressing concerns about adherence to guidelines, the CBN said it is important for BDC operators to work within the prescribed framework.

The intervention targets retail-end transactions, including travel allowances, tuition fees, and medical payments, among others.

BDCs are instructed to commence payment of the Naira deposit to designated CBN accounts and submit necessary documentation for FX disbursement at respective CBN branches.

This latest initiative follows previous interventions by the CBN, including the sale of $10,000 to BDCs earlier this month at N1,101 per dollar. Such measures aim to shore up the Naira’s value and ensure stability in the forex market amid economic uncertainties.

The CBN’s sustained efforts to provide adequate forex liquidity underscore its commitment to safeguarding the country’s currency and facilitating seamless foreign exchange transactions for businesses and individuals alike.