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Forex Weekly Outlook September 19 – 23

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CBN

The US dollar gained against all the major currencies last week, following better than expected inflation report released on Friday. This, coupled with the comments from Federal Reserve officials bolstered the attractiveness of the US dollar as investors/traders jumped on it in anticipation that the Federal Open Market Committee (FOMC) will raise borrowing cost.

While, speculations formed the bulk of the unsustainable dollars’ gains. It is imperative to note that the dollar’s gains was partly the reason import prices dropped from an increase of 0.1 percent in July to a decline of-0.2 percent in August, this drop in prices is expected to weigh on September consumer price index and damped August recorded progress.

Again, the drop in consumer spending (-0.3%) and worse than expected producer prices (0.0%) record in August are pivotal to Fed’s rate decision — especially with industrial production (-0.4%) and capacity utilization (75.5%) declining at the same time.  Hence, the disconnection between macro data and current dollar bullish run should be closely watched per adventure the Bank of Japan decided as that will either shift current dollar gains to the Yen or boost it even further. This week, volatility is expected as the FOMC meets to announce economic projection and federal funds rate on Wednesday.

In Australia, the unemployment rate dropped to three-year low of 5.6 percent in August, despite the loss of 3,900 jobs. The contradictory result confirmed Capital Economics insinuation that the fall in jobs was a bit bigger than it looked. Also, the weak wages and low consumer spending at a record low unemployment rate point to an economy that is struggling and grossly ambiguous.

In the UK, the pound lost part of its gains last week after data revealed that producer price input dropped to 0.2 percent from 3.1 percent and that consumer prices remained unchanged at 0.6 percent even with the weak pound. Although, unemployment rate remained 4.9 percent, average earnings dropped from 2.5 percent to 2.3 percent and consumer spending managed to exceed expectation by declining 0.2 percent against the 0.4 percent widely expected.

This week, the world awaits the Bank of Japan decision (BOJ) after over three years of unconventional monetary policy called qualitative and quantitative easing (QQE). The Hahuriko Kuroda team is expected to expand its monetary policy in an effort to boost exports and fight off insistent low consumer prices, and also halt the continuous gain of the Yen. Accordingly, the financial markets will experience high volatility this week as both the Fed and BOJ attempt to further their economic growth amid high global risks and uncertainties.

Overall, the financial market is yet to find its rhythm as central banks strive to strike a balance between fiscal and monetary policy. This week, GBPJPY and EURAUD top my list.

GBPJPY

After the series of weak macro data released last week, the pound lost more than two weeks’ gains against all the major currencies. While the reports were not that bad, the impact on the pound showed how vulnerable the UK economy is to eventualities, as such greater attention should be given to this pair this week. Especially with the Fed and BOJ economic statement due on Wednesday.

gbpjpydaily

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Technically, after breaking 134.90 support level established in June. This pair has changed its outlook to the downside, while we need the BOJ decision to further validate this prediction. I am bearish on GBPJPY with 129.85 as the target, as long as 134.90 resistance holds.

EURAUD

Last week, our target hit at 1.5000. But since then Euro-area economic outlook has changed after Mario Draghi decision to leave rates unchanged. The Euro-area industrial production dropped from 0.8 percent to -1.1 percent, while both German and Euro-area ZEW economic sentiment also plunged. All these combined with weak manufacturing sector and post-Brexit uncertainties are weighing on the euro-zone economic outlook.

eurauddaily

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While, the Australian economy on the other hand, improved its unemployment rate to three-year low and has consistently used its broad financial base to enforce investors’ confidence in its economy, even though capital importation has seen a decline in recent time. The economy remained vibrant against the Euro single currency. This week, I am bearish on EURAUD as long as 1.5000 resistance holds, 1.4777 remains the first target and 1.4665 target two.

Is the CEO/Founder of Investors King Limited. A proven foreign exchange research analyst and a published author on Yahoo Finance, Nasdaq, Entrepreneur.com, Investorplace, and many more. He has over two decades of experience in global financial markets.

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Forex

Akinwumi Adesina Extols Africans in Diaspora on Cross-Border Remittance

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Akinwunmi Adesina - Investors King

African Development Bank (AfDB) President, Akinwumi Adeshina has extolled the tenacity and impacts of Africans in Diaspora on cross-border remittance.

According to the AfDB President, Africans in the diaspora are the continent’s largest financiers through their yearly remittances.

Speaking at an event organised by the Bank in collaboration with the African Union Commission, Adeshina noted that cross-border remittance into Africa is more than development assistance to the continent. 

Investors King earlier reported that remittance into Nigeria and other countries in the sub-Sahara Africa region hits $53 billion in 2022.

The AfDB President said, “The value of remittances from the African diaspora doubled from $37 billion in 2010 to $87 billion in 2019, reaching $95.6 billion by 2021. Yet official development assistance to Africa in 2021 was $35 billion, or 36% of the remittances from the diaspora”.

Adeshina added that Egypt and Nigeria are among the top-ten remittance recipients globally, with $31.5 billion and $19.2 billion, respectively in 2021. 

While speaking on the advantage of cross-border remittance to the African continent, the AfDB president noted that remittances have helped to meet financial, food, education, and health needs of many Africans, “it as well as serve as countercyclical sources of finance,” he said.

“The African diaspora has become the largest financier in Africa! And it is not debt, it is 100% gifts or grants, a new form of concessional financing that is the key for livelihood and security for millions of Africans” he added.

Similarly, Adeshina further positioned the need to eliminate premium charges on cross-border remittance into Africa. He noted that cross-border into Africa is twice what is it for South Asia.

He concluded that the Africans in diaspora can add more than remittance and investment, noting that they have skills, knowledge and know-how which can be needed for the development of the continent.

“They can help build world-class universities, and they can be mentors for the new generation of Africans,” he said. 

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eNaira

E-Naira Transaction Volume Rises to N5 Billion in November Amid Intensified Campaign

More Nigerians embrace eNaira wallet as CBN takes adoption campaign across the nation

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The Central Bank of Nigeria, (CBN) has disclosed that e-Naira transaction volume rose to a record N5 billion in the month of November following a series of campaigns initiated to encourage adoption.

Investors King had earlier reported how the e-Naira adoption team visited a number of parks in Abuja and the University of Lagos among other locations to drive the adoption of the digital currency. 

Speaking at the Second Edition of the Africa Cashless Payment Conference, CBN’s Director of Information and Technology, Hajiya Rakiya Mohammed noted that transaction on the e-naira platform does not attract any charges. 

She stated that Nigeria’s financial ecosystem is large to accommodate everyone.

Hajia Rakiya added that the e-Naira platform can be operated in any of Nigeria’s major local languages, stating that onboarding onto the e-Naira platform is a simple process. 

She further stressed that the primary goal of the e-naira is to reduce the amount of cash in circulation, thereby downsizing the cost of producing paper currency, increase in revenue and direct disbursement to citizens.

Meanwhile, the e-Naira circulation has reached N401.82 million as more Nigerians embraced the digital currency. 

It could be recalled that on October 25, 2021, CBN launched the e-Naira making Nigeria the first African country to have a digital currency. 

During the unveiling of the e-Naira in Abuja, President Muhammadu Buhari stated that the digital naira would increase remittances, foster cross-border trade, improve financial inclusion and enable the government to make welfare payments more easily.

On his part, the CBN Governor, Godwin Emefiele disclosed that the e-Naira offered Nigerians endless possibilities in using financial services. 

While admonishing more Nigerians to embrace the digital naira, Hajia Rakiya noted that “both banked and unbanked can use it, and it can be done through USSD *997#. We have integrated it with telecoms and NIBBS instant payments plus integration with money transfer operations so you can use e-naira for cross border”.

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Naira

CBN Will Redesign Naira Notes Every Five to Eight Years; Say Emefiele

The central bank will henceforth redesign the nation’s legal tender every five to eight years

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New Naira Notes

Governor of the Central Bank of Nigeria (CBN), Godwin Emefiele has said the bank will henceforth redesign the nation’s legal tender every five to eight years.

The apex bank governor revealed at the unveiling of the new naira notes on Tuesday. 

Godwin Emefiele explained that the naira redesign is in line with global best practice noting that the naira needed to be redesigned and re-issued every five to eight years.

According to the CBN governor, previous administrations lacked the political will to approve the redesign of the naira notes. Stating that it is regrettable that the naira has not been redesigned for the past 19 years. 

“In the past, I have to confess that attempts by the CBN to redesign and re-issue the naira notes have been resisted. It is only President Muhammadu Buhari that has exhibited the courage to do so,” the CBN governor stated. 

Emefiele added that going forward, naira notes will be redesigned at intervals to address some peculiar issues. 

 “After today, the CBN will begin to redesign and reissue the naira every five to eight years,” he said. 

Investors King had earlier reported that President Muhammadu Buhari unveiled the redesigned naira notes at the Federal Executive Council (FEC) meeting today. 

Among those who joined the president with the unveiling include the CBN governor and the EFCC chairman.

Recall, in October, the CBN announced it will redesign the N200, N500 and N1,000 notes in line with its mandate.

Meanwhile, the CBN governor has disclosed that the new naira notes can not be counterfeited because of the features embedded in them. 

Similarly, he added that security agencies would be monitoring people making withdrawals at the counter to sniff out money laundering and unravel illegal usage. 

“The CBN has moved to a cashless economy. We will restrain the volume of cash someone will withdraw over the counter. We will follow up with the person’s data to know the reason for such withdrawal,” he concluded.

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