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Forex Weekly Outlook September 26-30

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The US Federal Reserve on Wednesday left interest rate unchanged, even though the Federal Open Market Committee argued that the case for rate hike has strengthened, they agreed that further evidence of continued growth is needed to validate current economic progress. Also, the committee lowered its expectations for both inflation and economic growth this year, citing weak business fixed income and international developments (Brexit and slowdown in China) while hoping that “as the transitory effects of past declines in energy and import prices dissipate and the labor market strengthens further” the 2 percent inflation target would be achieved.

However, housing starts declined by 5.8 percent to 1.14 million units in August, while building permits fell 0.4 percent to 1.14 million-unit rate. Even though, unemployment claims improved by 8,000 to 252,000 last week, the disparity in the data continued to create a mixed picture of the American economy. Particularly, when the drop in consumer spending that has been supporting the economy is factored-in. Hence, investors will look to seek clarity on future monetary policy when Fed Chair Janet Yellen and Federal Reserve Bank of St. Louis President James Bullard speaks on Wednesday.

Also, the data for durable goods, new home sales, consumer confidence and final GDP that are due this week are other key economic data needed to decipher the economic direction going forward.

In Japan, the Bank of Japan left interest rate unchanged, but took a different turn when it introduced “yield curve control”, a policy that was formulated to keep the 10-year Japanese government bond yield at zero percent from the usual negative yield (a situation where bond buyers pay to lend Japanese government money) to steepen the difference between the yields of short-term bonds (which are negative in Japan) and long-term bonds.

While some analysts have said the whole policy is a sign that the Haruhiko Kuroda led team is running out of policy options, it was implemented in an effort to increase banking activity and subsequently boost their profitability through wider spread in rates to arbitrage profits. This is because an increase in banking activity means greater economic activity and higher consumer prices, but because the detail of the yield curve control was vague it is hard to succinctly tell to what degree the BOJ planned to steepen the yield curve or if the apex bank will expand its stimulus.

Nevertheless, the industrial production declined by 0.3 percent from 0.0 percent recorded previously. This signaled that the world’s third largest economy is still struggling with weak exports due to the continuous gain of the Japanese yen that has sapped profits of manufacturing companies.

In Canada, the economy is not just running at a 10-month low inflation rate (0.2%) but also weak retail sales (-0.1%) as consumers are not spending even after the federal government revamped its child benefit plan and distributed cheques in July. The same month, the consumer spending dipped against a widely forecast increase in retail sales, this was after the economy recorded its worst contraction since 2009.  If global oil gut continued to weigh on growth, it is likely that the Bank of Canada will cut rates to stimulate the economy, maybe not in October meeting but in the fourth quarter if no improvement in key indicators.

Overall, the Bank of Japan will need the Federal Reserve to raise rates in order to halt the yen gains and boost its exports. However, the financial markets remained vague and highly speculative as central banks (US, Japan, Australia, New Zealand, Nigeria and South Africa) refrain from excessive stimulus, but without clear cut monetary policy. This week, NZDJPY and NZDUSD top my list.

NZDJPY

After the New Zealand’s second quarter GDP expanded at 0.9 percent three weeks ago, which was less than the 1.1 percent expected by economists. The New Zealand dollar has continued to slide against the Japanese yen, this I expect to boost the NZDJPY sell-off this week as Japanese yen continued to strengthen after the BOJ refused to expand its monetary policy.

nzdjpyweekly

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Technically, this pair has been selling for the past three weeks and lost 309 pips in total. This week, as long as 73.90 resistance holds I am bearish on NZDJPY with 72.34 as the first target and 69.94 as the second target.

NZDUSD

Although, various US data due this week could damp this pair outlook. I still believed that the US dollar is attractive enough to extend its gains against the New Zealand dollar. Nevertheless, it is advisable to monitor those data and FOMC speakers this week.

nzdusdweekly

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This pair peaked at 0.7484 three weeks ago, but since then it has lost 241 pips and closed as a bearish pin bar last week. This week, as long as 0.7362 resistance holds, I am bearish on this pair with 0.6989 as the target.

 

 

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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Naira

Naira Falls to N500/US$1 at Black Market on Monday

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Naira - Investors King

Despite efforts by the Central Bank of Nigeria (CBN) to improve dollar liquidity across the foreign exchange segments and prop up Naira value, the Nigerian Naira dipped to N500 against the United States Dollar on Monday at the nation’s black market.

Last week, the CBN announced plans to increase forex allocation to Deposit Money Banks in a bid to ensure Nigerians access forex at a fair rate and not forced to patronise the black market operators with exuberant rates.

The CBN agreed to increase the amount allocated to banks for travellers, Small and Medium Enterprises among others. The banks also agreed to operate something akin to foreign exchange imprest account such that the coffers of banks will be replenished so long as they retire the initial amounts to the satisfaction of the CBN”, stated Mr. Osita Nwanisobi, the Acting Director, Corporate Communications Department at the CBN.

The Naira quickly gained against its global counterparts, improving to N493 against the American Dollar last week before resuming its long-term bearish trend to N500/US$1 at the black market on Monday 21, June 2021.

The embattled currency depreciated in value against both the Euro and British Pound, exchanged at N590 and N710, respectively.

At the NAFEX window, the CBN new adopted official rate, the Naira traded at N411.67 to a United States Dollar on Monday while investors transacted $94.17 million during the trading hours of Monday.

At the Bureau De Exchange section of forex, Naira sold for N495 per US Dollar, N715 to a British Pound and N603 to a Euro.

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Naira

Nigerian Naira Exchange Rates; Tuesday, June 22, 2021

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Naira - Investors King

 The Nigerian Naira lost N2 against the United States Dollar on Monday to N500 despite efforts by the Central Bank of Nigeria to prop the local currency value.

The embattled currency remained pressured at N710 to a British Pound and N590 to a single Euro.  Naira opened at N500 to a United States Dollar on Tuesday.

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
22/06/2021 495/500* 703/710* 585/590* 62/69 400/410 300/322
21/06/2021 495/500 703/710 585/592 62/69 400/410 300/325
18/06/2021 492/498 700/710 585/595 62/69 400/410 300/325
17/06/2021 483/493 700/710 590/600 62/69 400/410 300/322
16/06/2021 497/502 707/713 600/606 62/69 400/410 300/322

Bureau De Change Naira Rates

Date USD GBP EURO
NGN BUY/SELL BUY/SELL BUY/SELL
22/06/2021 485/495 700/715 580/603
21/06/2021 480/490 680/710 550/603
19/06/2021 475/490 680/715 580/603
18/06/2021 475/485 680/715 580/603
17/06/2021 478/490 690/710 590/603
16/06/2021 495/500 707/718 600/609
15/06/2021 495/500 707/718 600/609
14/06/2021 490/498 705/718 600/608

Central Bank of Nigeria’s Official Naira Rates

Date Currency Buying(NGN) Central(NGN) Selling(NGN)
6/21/2021 US DOLLAR 409.2 409.7 410.2
6/21/2021 POUNDS STERLING 567.6422 568.3358 569.0294
6/21/2021 EURO 486.5797 487.1743 487.7688
6/21/2021 SWISS FRANC 444.0586 444.6012 445.1438
6/21/2021 YEN 3.7166 3.7212 3.7257
6/21/2021 CFA 0.7231 0.7331 0.7431
6/21/2021 WAUA 583.9237 584.6372 585.3507
6/21/2021 YUAN/RENMINBI 63.2634 63.3412 63.4189
6/21/2021 RIYAL 109.1113 109.2446 109.3779
6/21/2021 SOUTH AFRICAN RAND 28.7174 28.7525 28.7876

 

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Naira

Naira Exchange Rates; Monday, June 21, 2021

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Naira Dollar Exchange Rate - Investors King

The Nigerian Naira continues its decline against global counterparts after gaining on the back of the Central Bank of Nigeria’s proposed increase in foreign exchange supply to all forex operators across the country.

Naira gained on the parallel market to exchange at N493 against the United States Dollar on Tuesday 15, June 2021 before dropping to N497 on Wednesday 16, June 2021.

The local currency plunged as low as N502 to a United States Dollar on the parallel market before the CBN announced its plans to up liquidity in an effort to ease scarcity and speed up business activities in the largely import-dependent economy. See the Naira exchange rates across various sections of foreign exchange markets.

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
21/06/2021 495/500 703/710 585/592 62/69 400/410 300/325
18/06/2021 492/498 700/710 585/595 62/69 400/410 300/325
17/06/2021 483/493 700/710 590/600 62/69 400/410 300/322
16/06/2021 497/502 707/713 600/606 62/69 400/410 300/322

Bureau De Change Naira Rates

Date USD GBP EURO
NGN BUY/SELL BUY/SELL BUY/SELL
21/06/2021 480/90 680/710 550/603
19/06/2021 475/490 680/715 580/603
18/06/2021 475/485 680/715 580/603
17/06/2021 478/490 690/710 590/603
16/06/2021 495/500 707/718 600/609
15/06/2021 495/500 707/718 600/609
14/06/2021 490/498 705/718 600/608

Central Bank of Nigeria’s Official Naira Rates

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