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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.”

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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eNaira

CBN Refutes Rumours Of Naira Replacement

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enaira

The Central Bank of Nigeria (CBN) has on Saturday, refuted rumours that it planned to replace the Naira notes in circulation with digital currency, otherwise known as the eNaira, in due course. 

The apex bank, through its CBN Director, Corporate Communications Department, Mr Osita Nwanisobi, said the statement released, supposedly during the stakeholders’ engagement on eNaira adoption in Asaba, Delta was “misconstrued” and therefore called on the public to completely disregard it.

Nwanisobi said: “The digital version of the naira is meant to complement the existing currency notes and therefore, will circulate simultaneously as means of exchange and store of value.

“The digital legal tender aside from the safety and speedy features, it will also ensure greater access to financial services by the underbanked and unbanked populace thereby enhancing financial inclusion”. 

He therefore urged members of the public and business owners to embrace the digital currency, the eNaira as it offers more possibilities. 

Investors King recalls that in the early hours of Saturday, the Delta State Branch Controller of CBN, Mr Godwin Okafor, had revealed that the Paper currency (Naira) will soon be out of circulation, urging citizens to patronise e-Naira.

Godwin had explained that the bank is the market to further educate the people on the use and importance of the digital currency which is fully backed by the apex bank, unlike Bitcoin which has no legal backing.

He had made the statement at the popular Ogbogonogo market, Delta, during the market sensitisation on e-Naira.

“Paper currency will soon be out of circulation because CBN spent money to print money and people abuse the currency in the market, spraying at the occasion, payment of Okada/tricycle and others and CBN is losing”, he had revealed.

 

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eNaira

“Paper Currency Will Soon be Out of Circulation” – CBN Official

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enaira

Delta State Branch Controller of Central Bank of Nigeria (CBN), Mr Godwin Okafor, has revealed that the Paper currency, (Naira) will soon be out of circulation, urging citizens to patronize e-Naira.

Mr Godwin explained this at the famous Ogbogonogo market, Delta, during the market sensitisation on e-Naira.

“We are here at the market today to sensitise the market people on the use of e-Naira. It is fully backed by CBN, unlike Bitcoin which has no legal backing,” he said.

“Paper currency will soon be out of circulation because CBN spent money to print money and people abuse the currency in the market, spraying at the occasion, payment of Okada/tricycle and others and CBN is losing.”

In relation to this, Investors King had reported the President’s statement on the importance of the e-Naira to the country’s economy. President Buhari said the launching of the E-Naira makes Nigeria the first country in Africa and one of the first few countries in the world to launch a digital currency.

He further said he expects the currency to enable the government to send direct payments to citizens eligible for government welfare programs as well as foster cross-border trade and assist in moving many more people and businesses from the informal sector into the formal sector, therefore, increasing the tax base of the country.

Further, he explained that being a digital currency, it has the potential to increase Nigeria’s GDP by $29 billion over the next 10 years.

Dr. Aminu Bizi, a CBN e-Naira expert, said Delta was chosen as the second state after Lagos to sensitize market women on the currency.

He said the use of e-Naira was effective, charges free unlike ATM and POS and cannot be hacked by fraudsters.

Secretary to the State Government, Chief Patrick Ukah, praised the CBN for the e-Naira project in his remarks.

He expressed his satisfaction with CBN programs, characterizing e-Naira as a “laudable” initiative that has elevated Nigeria’s position in international finance.

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Naira

Naira Exchange Rate Dips at Official Market and Black Market

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Naira - Investors King

The Nigerian Naira opened the week lower against the United States Dollar at the Investors and Exporters (I&E) foreign exchange window now adopted as the official forex window and also at the black market.

The local currency opened at N417.30 against the United States Dollar before declining by 0.60% to close the day at N421.50/$ at the I&E window. Forex traders at the window transacted forex worth $70.68 million on Monday.

For banks and international money transfer operators, the Central Bank of Nigeria buys US Dollars at N414.75 and sells at N415.75. The apex bank buys and sells Pounds Sterling N508.2761 and N509.5016, respectively. For the European common currency, the Euro, the central bank sold it at N433.0453 and acquired it at N432.0036 a unit.

At the parallel market popularly known as the black market, the Naira was exchanged at N599 for a United States Dollar in Abuja.

Speaking on why the exchange rate is that high, Abu Abdullahi, a currency trader at Zone 4 in Abuja, said demand for the U.S. Dollar is high despite persistent scarcity.

Crude Oil

Crude oil extended its gain in the early hours of Tuesday on optimism that China, the world’s largest importer of the commodity, would see substantial demand recovery after the latest data pointed to slowing COVID-19 infections in the hardest-hit areas.

Brent crude oil, the international benchmark for Nigerian crude oil, gained $2.69, or 2.4% to $114.24 a barrel at 5 am Nigerian time. The U.S. West Texas Intermediate (WTI) crude rose $3.71, or 3.4%, to $114.20 a barrel, Investors King understands.

“We are seeing a lot of signals that demand will start returning in that region, supporting higher prices,” said Bob Yawger, director of energy futures at Mizuho.

Cryptocurrency

Finally, Bitcoin and other cryptocurrencies shake off Luna-led decline to pare losses on Tuesday. Luna Foundation Guard (LFG) announced in the late hours of Monday that it was discontinuing Luna Coin and stablecoin (UST) operations to launch a new blockchain protocol that would focus on developers and building in general.

The announcement marked the end of one of the most promising cryptocurrency projects and once again reminds the world of how vulnerable the cryptocurrency space is — regardless of what creators say.

Bitcoin gained 1.99% to $30,366 per coin while Eth, a token of Ethereum, XRP (token of Ripple) and Solana appreciated by 3.15%, 3.25% and 4.39% to close at $2,084.27, $0.431744 and $55.86, respectively.

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