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Forex Weekly Outlook October 31-November 4

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United States Dollar - Investors King Ltd
  • Forex Weekly Outlook October 31-November 4

The US economy recorded its fastest growth rate in two years in the third quarter, expanding at a 2.9 percent annualized rate. While, this is more than the 1.4 percent recorded in the second quarter and surpassed analysts’ 2.5 percent forecast, the dollar declined against most of its counterparts on Friday, after the Federal Bureau of Investigation (FBI) said it would investigate Hillary Clinton’s use of a personal email server while secretary of state. This report, shocked the markets that was already pricing in the likelihood of a Clinton president over Donald Trump and subsequently plunged the US stocks and currency, as investors scramble to assess the news that could be an advantage to Republican candidate Donald Trump.

Nevertheless, the new home sales (593,000) came out below economists’ forecast of 601,000 in September, but better than 575,000 recorded in August, while consumer sentiment drop to 98.6 in October, from 103.5 in September. On a critical look into the GDP report, consumer spending (2.1 percent) that has aided the economy, thus far was weaker than predicted in the third quarter, creating a mixed picture of the economy, but the increase in inventory rebuilding and soybean-related exports boosted the rebound recorded in the quarter. Although, the data is in line with Federal Reserve’s slow and steady progress, it is uncertain if the mixed outlook and strong underlying fundamentals are enough to raise rates this December.

However, the US dollar is expected to continue its gains once investors digested the FBI announcement and realized it’s unlikely to impact the election as it is. The table below shows U.S key macro data due this week.

US Economic  Release                              Forecast                 Previous
Average Hourly Earnings m/m            0.3%                          0.2%
Non-Farm Employment Change         175K                           156K              
Unemployment Rate                               4.9%                             5.0%             
Trade Balance                                           -39.2B                         -40.7B
Federal Funds Rate                                  0.5%                             0.5%
ISM Non-Manufacturing PMI              56.2                              57.1

In the UK, the economy surprisingly expanded 0.5 percent in the third quarter, beating 0.3 percent predicted by analysts even after the country’s decision to leave the European Union in June. The economy continued to grow with a better than expected performance from the services sector, growing at 0.8 percent rate, the fastest since 2009.

While construction fell 1.4 percent and manufacturing declined 1 percent with production dropping 0.4 percent in the third quarter, the economy’s resilience, due to strong consumer spending and services sector means it is unlikely the Bank of England will ease below current 0.25 percent interest rate this year — this is because the inflation rate is rising at a much faster pace and it will continue with the pound lower exchange rate and increasing cost of imported goods. This week, manufacturing, services and construction PMI report will help assess economic improvement prior to the monetary policy committee decision due on Thursday.

In Australia, inflation rate unexpectedly rose 0.7 percent in the third quarter, reducing the possibility of the RBA cutting rate in November. Even though, the RBA new governor Philip Lowe said the various factors suppressing inflation are expected to continue for a while, markets believe with the yearly inflation at 1.3 percent and an unemployment rate at 5.6 percent that it is unlikely the apex bank will loosen monetary policy this year, especially with high asset prices, particularly housing in Sydney and Melbourne, further easing could fuel borrowing among already heavily indebted Australian households. This week, the RBA is expected to maintain current 1.5 percent cash rate at its next meeting on Tuesday, while building approvals report is expected to dip further to -2.8 percent from previously declining -1.8 percent. Retail sales and trade balance will throw more lights to consumer spending and improvement in the manufacturing sector going forward.

Crude Oil, The Organization of the Petroleum Exporting Countries (OPEC) is yet to finalize production cap, as Iraq is seeking a similar exemption to what Nigeria and Libya are likely to get when the organization meet again on November 20. While, Iran has disagreed with the OPEC’s methodology insisting the nation need to reach pre-sanction level of 4 million barrels a day, an increase of about 400,000 barrels a day from current levels — a situation that is threatening the viability of the Algiers accord.

According, non-OPEC producers are yet to join OPEC on production cap, suggesting they wanted the OPEC to solve its differences before making known their commitment to managing the global oil glut.

Brent crude dropped 0.6 percent on Friday to trade at $49.42 a barrel.

Overall, high volatility is expected in the month of November, considering the US presidential election is due on November 8 — with fresh huddles for the Democratic presidential candidate Hilary Clinton to negate going forward. This week, investors will seek to digest a series of macro data and monetary policy decision due across key G7 nations. Also, commodities dependent currencies are likely to experience more volatility as OPEC seek to reach a consensus amid disagreement among its members. However, this week, my last week pick top my list, while monitoring series of events that will be unfolding across the financial market.

 

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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enaira

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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