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Dollar Drops As Goldman Asset Sees Rally Losing Steam

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Bureau Of Engraving And Printing Prints New Anti-Counterfeit 100 Dollar Bills

The dollar declined from a seven-week high as investors braced for the Federal Reserve policy decision this week and Goldman Sachs Asset Management said a rally that propelled the dollar to a seven-week high will fizzle.

The money manager said it expects the U.S. central bank to forgo an interest-rate increase this week, in line with the median forecast in a Bloomberg survey, even after a report Sept. 16 showing U.S. inflation rising faster than economists forecast drove the greenback higher. Hedge funds and other speculative investors trimmed bullish dollar positions last week as they awaited comments from policy makers about the path of interest rates.

Parent Goldman Sachs Group Inc. cut its forecasts for gains in the U.S. currency versus the yen, saying it is “not optimistic” about the outcome of the Bank of Japan’s policy meeting this week.

“Over the medium to longer term, we continue to expect U.S. dollar weakness versus G-10 and emerging-market currencies,” the asset-management firm said in a note to clients dated Sept. 16. “We expect no move in September but anticipate the Fed will signal that a rate hike is still possible this year, while the pace of tightening will be even more shallow and gradual than previous Fed projections.”

The dollar weakened 0.1 percent to $1.1166 per euro as of 8:48 a.m. New York time and fell 0.5 percent to 101.77 yen. The Bloomberg Dollar Spot Index fell 0.3 percent from Sept. 16, when it jumped 0.7 percent to close at its highest level since July 28.

Hedge Funds

Hedge funds and other large speculators cut net bullish positions on the dollar for the week ended Sept. 13, according to data from the Commodity Futures Trading Commission. Bets that the dollar would rise outnumbered bearish positions by 113,195 contracts, down from 119,066 in the previous period.
Fed Fund futures imply a one-in-five chance of Fed action Wednesday and a 55 percent chance by year-end.

Since boosting interest rates last December, Fed policy makers have refrained from a subsequent hike, with external factors from Brexit to concerns over global growth staying their hand. Later this year, the U.S. election might deter them, according to Neil Jones, head of hedge fund sales at Mizuho Bank Ltd. in London.

Polls show the presidential race is getting tighter, clouding the outlook for U.S. Policy beyond November’s vote. Citigroup Inc. reduced its forecast of the likelihood of a Hillary Clinton victory to 60 percent from 65 percent, with a 40 percent probability of a victory by Donald Trump, analysts led by Tina Fordham wrote in client note.

“Many still believe a December rate hike is on the cards, but some might be cautious because policy makers have told the market they were ready to raise rates this year but that has not happened,” said Mizuho’s Jones. “I see politics in the U.S. as a risk. It may deter the Fed from delivering a rate increase.”
The BOJ decides policy the same day as the Fed this week, with forecasts for action by analysts ranging widely. That is complicating the job of currency traders trying to position for the event. Japan became the epicenter of a global bond selloff this month, amid speculation the central bank will pull back from buying long-term bonds after Governor Haruhiko Kuroda ordered a comprehensive review of its easing program.

‘Broad Range’

“The U.S. dollar is going to trade in a broad range, capped by Fed inaction on the one side, and the potential for heightened volatility on the other,” said Daniel Been, head of foreign exchange research at Australia & New Zealand Banking Group Ltd. in Sydney. “The BOJ and the potential for them to drive a larger global steepening is the bigger event.”

Goldman Sachs, the investment bank, is taking the view that Japan’s central bank “will continue to ease at upcoming meetings,” likely by further cuts to the deposit rate, but it won’t be enough to reverse the “adverse dynamic” created in January, with the introduction of a negative interest-rate policy. The Wall Street firm cut its three-month forecast for the dollar to 108 yen from 115 yen, and its 12-month prediction to 115 yen from 125 yen.

“Focus at the BOJ has shifted toward making the existing policy stance sustainable, as opposed to adding stimulus to meet the inflation target,” Goldman Sachs analysts led by Robin Brooks wrote in a note dated Sept. 18. “We are not optimistic.”

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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