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Forex Weekly Outlook October 3-7

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Forex Weekly Outlook October 3-7

The US dollar retreated against the Euro-single currency on Friday, after the Deutsche Bank was said to have reached an agreement with the US Department of Justice (DOJ) to pay $5.4 billion to settle its mortgage-securities investigation instead of the original proposition of $14 billon. However, other factors contributed to the drop in the exchange rate of the US dollar, even though the consumer confidence (104.1) rose to its highest in 9-year and second quarter GDP was revised upward to 1.4 percent from 1.1 percent previously estimated. The Federal Reserve chair, Yellen Janet failed to convince the market that the decision to held interest rates at record-low wasn’t politically motivated, after Donald Trump accused the Fed chair of creating “a big, fat, ugly bubble” by leaving interest rates this low.

Again, three members of her own rate-setting group announced last week that they preferred to raise the federal funds rate by 25 basis points, which in turn validated the notion of disenchantment in the group. Nevertheless, the economy continued to create jobs at a solid pace but unemployment rate remains between 4.7 – 4.9 percent — which signifies that as some are being employed some are leaving for whatever reasons.

Although, the Federal Reserve Chair said that as long as monetary policy remains accommodative, that the economy would overheat and eventually pushed unemployment rate downward and boost inflation. But the question now is can this be sustained? This is one of the reasons the Federal Reserve is holding back, considering the fact that businesses tend to create lesser jobs with high borrowing cost and drop in job creation will lead to a surge in the unemployment rate and eventually drop in consumer spending that has been the backbone of the economy. So, according to the Fed Chair, it is risky to remove the accommodation as it is, hence, the no timetable for rate decision. This week, investors are waiting to see if Non-farm payroll added more jobs in September from the 151,000 recorded in August, and if the manufacturing (49.4) and services (51.4) sectors have picked up from August lows.

In Europe, the Euro-single currency plunged early in the week, following news of 12 hedge fund management companies withdrawing about $6.4 billion from Deutsche Bank, Europe’s largest investment bank, over concern the institution could go the way of Lehman Brothers if it failed to meet its multibillion dollar’s fine by the DOJ.

Currently, the region is struggling with the aftermath of the Brexit and lackluster growth which includes weak consumer prices (0.8%) and stagnant unemployment rate (10.1%). All these are expected to weaken business sentiment in the region and lead to more capital flight in the days to come — particularly with a judge in Milan, Italy approving prosecutors’ request on Saturday to try 13 bankers, including six current and ex-managers of Deutsche Bank over colluding to falsify the accounts of Italy’s third-biggest bank and manipulate the market.

I think it is going to get worse, even though a Deutsche Bank representative said the institution have enough liquidity to withstand withdrawals, trust and business confidence are going to drop as clients strive to make sense of the whole situation. Hence, Euro-single currency is expected to dip henceforth. Depending on Deutsche Bank proffer solution and market interpretation of such move.

In Japan, the economy continued to struggle with weak exports and low consumer prices even after introducing the “yield curve”. The data released last week showed consumer spending dropped 4.6 percent in August, while inflation (-0.4%), housing starts (2.5%) and unemployment rate (3.1%) are below expectation. The Bank of Japan last week shifted its focus to aiding banks’ profitability by making sure long-term bonds’ rates remain sufficiently above current negative rates, so banks can profit from lending into Japan’s stagnant economy. But the increase in demand has pushed yields on 10-year bond below BOJ’s zero target to -0.09 percent. This is likely to force BOJ to take action soon, if the whole yield curve concept is to be effective and the yen gains to be subdued.

In Algeria, OPEC members agreed last week to cut production to a range of 32.5 to 33 million barrels a day for the first time in 8 years. The announcement boosted crude oil prices and commodity currencies, before Iranian Oil Minister Bijan Zanganeh questioned the benchmark figure used by OPEC for the proposed production cut. Market experts are beginning to doubt the possibility of divided OPEC to go through with such decision come November when the members will meet again in Vienna, Austria.

As it is, the financial markets is largely being driven by speculators – what market participants perceived or interpreted a certain action by central banks or the Deutsche bank and the entire Europe region to be as uncertainties and  risks associated with investment has increased across the globe. Therefore, traders are advised to be cautious as we seek to decipher Deutsche Bank situation, BOJ new yield curve policy and Non-farm payrolls this week. However, EURAUD and NZDUSD to my list this week.

EURAUD

Since our target was hit at 1.5020 three weeks ago, this pair has lost 355 pips. I believe the attractiveness of the Australian dollar due to the series of positive macro data released recently will push this pair further down. Again, I am pricing in the possibility of euro-single currency dropping more this week as the market digest Saturday’s news of 6 current executives and ex-managers of Deutsche Bank approved by an Italian judge for investigation. This will likely worsen the currency position against its counterparts.

eurauddaily

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Technically, since this pair closed as bearish pin bar three weeks ago and validated that by closing bearish two weeks ago, and even last week. The price action has turned bearish and with the uncertainties in the Europe area, we might see 1.4486 this week. Hence, as long as 1.4777 holds, I am bearish on EURAUD this week with 1.4486 as the target.

NZDUSD

Last week, I was bearish on NZDUSD but OPEC decision to cut production bolstered all commodity currencies, even though US macro data were positive the doubt created by Federal Reserve Chair Yellen Janet weighs on the dollar strength. This week, I remain bearish on this pair because one, as long as 0.7362 resistance holds, this pair is bearish. Two, the New Zealand trade balance figure released last week revealed that deficit rose to 1265 from -351 previously recorded. This means, exports dropped more than estimated which is yet to reflect in the pair due to US fed issues.

nzdusdweekly

Click to enlarge

This week, as long as 0.7362 resistance holds, I am bearish on this pair with 0.6989 as the target. But price below 0.7253 support will confirm downward movement.

NZDJPY

Last week, I was bearish on NZDJPY but OPEC decision to cut production daunt the outlook. So this week, I will be standing aside on NZDJPY to assess Japan’s “yield curve concept” and market reaction to increase in demand that has pushed yields on 10-year bond below BOJ 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.

Naira

Daily Naira Exchange Rates; Friday, March 5, 2021

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naira

Naira Exchange Rates; Friday, March 5, 2021

Naira remained pressured across key foreign exchange markets on Friday, March 5, 2021 as scarcity persists. The local currency traded at N480 to a United States Dollar at the parallel market on Friday morning while it exchanged at N675 to a British Pound and N582 to the European common currency.

Daily 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
05/03/2021 475/480 670/675 575/582 60/68 385/395 382/300
04/03/2021 475/480 665/672 574/580 60/68 385/395 382/300
03/03/2021 475/480 662/672 574/580 60/68 385/395 382/300
02/03/2021 475/480 662/672 574/580 60/68 385/395 382/300
01/03/2021 475/482 662/672 575/583 60/68 385/395 382/300
26/02/2021 475/482 660/672 575/583 60/68 385/395 382/300
25/02/2021 475/480 660/670 572/580 60/68 385/395 282/300
24/02/2021 475/480 655/670 570/580 60/68 385/395 282/300
23/02/2021 475/480 655/665 575/582 60/68 385/395 282/300
22/02/2021 475/480 652/660 575/580 60/68 385/395 282/300
19/02/2021 474/478 648/655 570/577 60/68 385/395 282/300
18/02/2021 472/477 645/655 570/575 60/68 385/395 282/300
17/02/2021 472/478 645/655 570/575 60/68 385/395 282/300
16/02/2021 465/473 645/652 565/570 60/68 385/395 282/300
15/02/2021 465/473 642/652 562/570 60/68 385/395 282/300
12/02/2021 465/473 642/650 562/570 60/68 385/395 282/300
11/02/2021 465/475 640/650 560/570 60/70 385/400 280/300
10/02/2021 472/478 645/652 565/575 60/70 385/400 280/300
09/02/2021 474/480 645/655 567/575 60/70 385/400 280/300
08/02/2021 474/480 645/655 567/575 60/70 385/400 280/300
05/02/2021 474/480 645/653 567/578 60/70 385/400 280/300
04/02/2021 474/480 645/653 567/578 60/70 385/400 280/300
03/02/2021 474/480 642/655 575/580 60/70 385/400 280/300
02/02/2021 474/480 642/655 575/580 60/70 385/400 280/300
01/02/2021 474/480 642/655 575/580 60/70 385/400 280/300
29/01/2021 474/480 642/652 575/580 60/70 385/400 280/300

Bureau De Change Naira Rates

Date USD GBP EURO
NGN BUY/SELL BUY/SELL BUY/SELL
05/03/2021 470/480 662/672 570/580
04/03/2021 470/480 662/672 570/580
03/03/2021 470/480 662/670 573/580
02/03/2021 470/480 660/669 573/580
01/03/2021 470/480 660/669 574/580
26/02/2021 470/480 660/669 574/580
25/02/2021 470/480 658/665 574/580
24/02/2021 470/478 654/660 570/578
23/02/2021 470/478 654/660 570/578
22/02/2021 470/477 650/656 570/577
19/02/2021 465/476 645/656 565/573
18/02/2021 465/475 640/652 563/570
17/02/2021 465/477 640/655 562/572
16/02/2021 460/475 640/652 562/570
15/02/2021 460/475 638/652 561/568
12/02/2021 467/475 635/650 562/570
11/02/2021 465/475 640/655 560/575
10/02/2021 472/478 640/655 565/575
09/02/2021 472/478 640/655 565/575
08/02/2021 472/478 640/655 565/575
05/02/2021 472/478 640/650 565/575
04/02/2021 472/478 640/650 565/575
03/02/2021 471/478 640/650 572/580
02/02/2021 471/478 640/655 572/580
01/02/2021 471/478 640/655 572/580
29/01/2021 471/477 640/648 570/579

Central Bank of Nigeria’s Official Naira Rates

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Naira

Naira Hits Record Low of N427 Against the United States Dollar on I&E FX Window

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Naira Exchanges at N427 Against the United States Dollar on I&E FX Window

The Nigerian Naira plunged to as low as N427.45 against the United States Dollar on the Investors and Exporters Foreign Exchange Window on Thursday, March 4, 2021.

The local currency pulled back to N406.50 a US Dollar but opened lower at N412.50 on Friday morning.

Investors traded $66.99 million during the trading hours of Thursday.

At the black market section of the foreign exchange, Naira traded at N480 against the United States Dollar while the British Pound was exchanged at N673.

The Euro common currency remained unchanged at N580, the same rate it exchanged on Monday.

Despite the surge in the oil price to N67 per barrel and a series of forex policies, the Central Bank of Nigeria continues to struggle with low dollar liquidity across the board.

Nigeria’s foreign reserves declined by about $1 billion in one month as Africa’s largest economy struggles with the weak fiscal buffer necessary to mitigate COVID-19 impacts and deepen productivity.

It would be recalled that the Central Bank of Nigeria adjusted its diaspora foreign remittance policy to curb rising foreign exchange rates and put an end to black market transactions hurting the nation’s local currency value.

However, since the new policy was enacted in November 2020, forex scarcity remained pervasive with diaspora remittance inflow expected to decline by $2 billion in 2020.

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Naira

Daily Naira Exchange Rates; Thursday, March 4, 2021

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Naira Exchange Rates; Thursday, March 4, 2021

Naira exchanged lower against global counterparts on Thursday morning as scarcity persists across forex segments. Naira traded at N480 to United States Dollar on the black market while to a British Pound it sold for N672 as shown below.

Daily 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
04/03/2021 475/480 665/672 574/580 60/68 385/395 382/300
03/03/2021 475/480 662/672 574/580 60/68 385/395 382/300
02/03/2021 475/480 662/672 574/580 60/68 385/395 382/300
01/03/2021 475/482 662/672 575/583 60/68 385/395 382/300
26/02/2021 475/482 660/672 575/583 60/68 385/395 382/300
25/02/2021 475/480 660/670 572/580 60/68 385/395 282/300
24/02/2021 475/480 655/670 570/580 60/68 385/395 282/300
23/02/2021 475/480 655/665 575/582 60/68 385/395 282/300
22/02/2021 475/480 652/660 575/580 60/68 385/395 282/300
19/02/2021 474/478 648/655 570/577 60/68 385/395 282/300
18/02/2021 472/477 645/655 570/575 60/68 385/395 282/300
17/02/2021 472/478 645/655 570/575 60/68 385/395 282/300
16/02/2021 465/473 645/652 565/570 60/68 385/395 282/300
15/02/2021 465/473 642/652 562/570 60/68 385/395 282/300
12/02/2021 465/473 642/650 562/570 60/68 385/395 282/300
11/02/2021 465/475 640/650 560/570 60/70 385/400 280/300
10/02/2021 472/478 645/652 565/575 60/70 385/400 280/300
09/02/2021 474/480 645/655 567/575 60/70 385/400 280/300
08/02/2021 474/480 645/655 567/575 60/70 385/400 280/300
05/02/2021 474/480 645/653 567/578 60/70 385/400 280/300
04/02/2021 474/480 645/653 567/578 60/70 385/400 280/300
03/02/2021 474/480 642/655 575/580 60/70 385/400 280/300
02/02/2021 474/480 642/655 575/580 60/70 385/400 280/300
01/02/2021 474/480 642/655 575/580 60/70 385/400 280/300
29/01/2021 474/480 642/652 575/580 60/70 385/400 280/300

Bureau De Change Naira Rates

Date USD GBP EURO
NGN BUY/SELL BUY/SELL BUY/SELL
04/03/2021 470/480 662/672 570/580
03/03/2021 470/480 662/670 573/580
02/03/2021 470/480 660/669 573/580
01/03/2021 470/480 660/669 574/580
26/02/2021 470/480 660/669 574/580
25/02/2021 470/480 658/665 574/580
24/02/2021 470/478 654/660 570/578
23/02/2021 470/478 654/660 570/578
22/02/2021 470/477 650/656 570/577
19/02/2021 465/476 645/656 565/573
18/02/2021 465/475 640/652 563/570
17/02/2021 465/477 640/655 562/572
16/02/2021 460/475 640/652 562/570
15/02/2021 460/475 638/652 561/568
12/02/2021 467/475 635/650 562/570
11/02/2021 465/475 640/655 560/575
10/02/2021 472/478 640/655 565/575
09/02/2021 472/478 640/655 565/575
08/02/2021 472/478 640/655 565/575
05/02/2021 472/478 640/650 565/575
04/02/2021 472/478 640/650 565/575
03/02/2021 471/478 640/650 572/580
02/02/2021 471/478 640/655 572/580
01/02/2021 471/478 640/655 572/580
29/01/2021 471/477 640/648 570/579

Central Bank of Nigeria’s Official Naira Rates

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