Forex

December Fed Hike Odds Approach 80% as Traders Pivot to Payrolls

Published

8 years ago

November 2, 2016

December Fed Hike Odds Approach 80% as Traders Pivot to Payrolls

Futures traders added to wagers that the Federal Reserve will tighten policy next month after officials left interest rates on hold and kept the option open for a hike by year-end.

Treasury yields remained lower as policy makers said “the case for an increase in the federal funds rate has continued to strengthen” as they kept its range at 0.25 percent to 0.5 percent, as forecast by all 90 economists surveyed by Bloomberg News. Officials came into 2016 projecting four hikes this year but haven’t moved once amid signs of tepid inflation and stagnant global growth.

The 78 percent probability traders are assigning to a rate hike is up from 68 percent on Tuesday, according to data compiled by Bloomberg, as policy makers noted growing confidence that inflation is on track to reach their 2 percent target. The probabilities are based on the assumption the effective fed funds rate will trade at the middle of the new range after the central bank’s next hike. Investors now turn their attention to the Nov. 4 release of the Labor Department’s October jobs report for the next clue to the path of monetary policy.

“This is as close as you can get to a data-dependent Fed saying they are most likely to go in December,” said Brent Schutte, Milwaukee-based chief investment strategist of Northwestern Mutual Life Insurance Co.’s wealth-management unit, which oversees $89 billion. “The most important thing is the labor-force participation rate.”

Benchmark 10-year Treasury note yields fell about two basis points, or 0.02 percentage point, to 1.8 percent at 5 p.m. in New York, according to Bloomberg Bond Trader data.

‘Baby Steps’

Yields on two-year notes, the coupon maturity most sensitive to Fed policy expectations, fell one basis point to 0.82 percent.

The day’s gains in Treasuries mark a reversal, with global bond markets coming off their worst month in two years amid investor concern that major central banks were preparing to gradually reduce unprecedented monetary stimulus. Traders were watching for an explicit message from the Fed that a hike is imminent, following months of signaling by officials that higher borrowing costs were warranted.

“The market is reflecting the obvious, which is that the Fed is taking baby steps to the hike,” said Neil Dutta, head of U.S. economics at Renaissance Macro Research LLC. “In September they clearly signaled a strong intent to go once this year. They’ll go at their last opportunity.”

U.S. nonfarm payrolls probably climbed by 175,000 last month, compared with an increase of 156,000 in September, according to the median forecast in a Bloomberg survey of economists.

Election Outlook

Policy makers said Wednesday that the pace of price increases “has increased somewhat since earlier this year” and that market-based measures of inflation compensation “have moved up.”

“I don’t think that they necessarily paved the way for a December hike, but as they stated, the case has continued to strengthen,” said Justin Lederer, an interest-rate strategist in New York at Cantor Fitzgerald LP, one of 23 primary dealers that trade with the Fed. “I think that ultimately rates do go higher but it may not be right away” because of uncertainty around the U.S. election.

A Bloomberg poll of independents showed Democratic nominee Hillary Clinton narrowly ahead of Republican candidate Donald Trump in a four-way race. It’s the latest example of how the race has tightened after the Federal Bureau of Investigation announced on Oct. 28 that the agency was examining newly discovered e-mails that might pertain to Clinton’s use of a private electronic service while she was secretary of state.

Some investors said the Fed’s decision next month will be affected by the election result.

“Reading between the lines of their statement, the Fed is waiting for the election results before deciding on a December rate hike,” said Tom di Galoma, managing director of government trading and strategy at Seaport Global Holdings in New York.

Swaps trading shows the expectation for a slow tightening cycle. Overnight index swap contracts implied the central bank’s benchmark rate will be just below one percent in three years, essentially indicating about two hikes, and less than half the median level seen by policy makers.

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Samed Olukoya

Is the CEO/Founder of Investors King Limited. A proven foreign exchange research analyst and a published author on Yahoo Finance, Businessinsider, Nasdaq, Entrepreneur.com, Investorplace, and many more. He has over two decades of experience in global financial markets.

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Naira

Black Market Dollar to Naira Exchange Rate Today 17th May 2024

The black market, also known as the parallel market or Aboki fx, US dollar to Nigerian Naira exchange rate as of May 17th, 2024 stood at 1 USD to ₦1,540.

Published

2 days ago

May 17, 2024

Samed Olukoya

The black market, also known as the parallel market or Aboki fx, US dollar to Nigerian Naira exchange rate as of May 17th, 2024 stood at 1 USD to ₦1,540.

Recent data from Bureau De Change (BDC) reveals that buyers in the Lagos Parallel Market purchased a dollar for ₦1,560 and sold it at ₦1,550 on Thursday, May 16th, 2024.

This indicates a slight improvement in the Naira exchange rate when compared to today’s rate.

The black market rate plays a crucial role for investors and participants, offering a real-time reflection of currency dynamics outside official or regulated exchange channels.

Monitoring these rates provides insights into the immediate value of the Naira against the dollar, guiding decision-making processes for individuals and businesses alike.

It’s important to note that while the black market offers valuable insights, the Central Bank of Nigeria (CBN) does not officially recognize its existence.

The CBN advises individuals engaging in forex transactions to utilize official banking channels, emphasizing the importance of compliance with regulatory frameworks.

How much is dollar to naira today in the black market

For those navigating the currency exchange landscape, here are the latest figures for the black market exchange rate:

Buying Rate: ₦1,540
Selling Rate: ₦1,530

As economic conditions continue to evolve, staying informed about currency exchange rates empowers individuals to make informed financial decisions. While the black market provides immediate insights, adherence to regulatory guidelines ensures stability and transparency in forex transactions.

Forex

SEC and ABCON Explore Collaboration for ‘Kolectyomoni’ Digital Currency Platform

Published

2 days ago

May 17, 2024

Samed Olukoya

The Association of Bureaux De Change Operators of Nigeria (ABCON) has initiated talks with the Securities and Exchange Commission (SEC) to explore collaboration on its upcoming digital currency market platform, ‘Kolectyomoni’.

This move was underscored during an official visit by ABCON representatives to the newly appointed Director General of the SEC, Dr. Timi Agama. Aminu Gwadabe, President of ABCON, conveyed the association’s eagerness to engage with SEC to ensure the smooth operation of its digital currency platform.

Gwadabe emphasized that ABCON recognizes the regulatory oversight of SEC in the financial sector and seeks its guidance to navigate the complexities of the digital currency market.

He pointed out that while digital currencies hold immense potential for financial inclusion and innovation, they also present regulatory challenges that require collaborative efforts between industry stakeholders and regulatory bodies.

Highlighting the significance of embracing digital currencies, Gwadabe noted, “The future of BDC’s business is digital currency.”

He stressed the growing adoption of digital currencies among Nigerians, citing statistics that reveal a rising number of participants in the digital currency ecosystem, with a substantial market size of $9 billion annually.

In response, Dr. Timi Agama expressed SEC’s openness to support and facilitate the growth of the digital currency sector in Nigeria.

He acknowledged ABCON’s initiative in launching the ‘Kolectyomoni’ platform and assured of SEC’s cooperation in providing regulatory guidance and oversight.

Agama reaffirmed SEC’s commitment to fostering innovation in the financial sector while ensuring investor protection and market integrity.

He underscored the importance of collaboration between regulators and industry players to develop robust frameworks that foster innovation and safeguard against potential risks.

Furthermore, Agama encouraged ABCON to finalize the development of the ‘Kolectyomoni’ digital currency platform and submit it to the SEC for thorough review and assessment by the technical team.

He emphasized the need for timely regulatory oversight to address emerging trends in the digital currency market and maintain regulatory compliance.

Naira

Black Market Dollar to Naira Exchange Rate Today 16th May 2024

The black market, also known as the parallel market or Aboki fx, US dollar to Nigerian Naira exchange rate as of May 16th, 2024 stood at 1 USD to ₦1,560.

Published

3 days ago

May 16, 2024

Samed Olukoya

The black market, also known as the parallel market or Aboki fx, US dollar to Nigerian Naira exchange rate as of May 16th, 2024 stood at 1 USD to ₦1,560.

Recent data from Bureau De Change (BDC) reveals that buyers in the Lagos Parallel Market purchased a dollar for ₦1,530 and sold it at ₦1,520 on Wednesday, May 15th, 2024.

This indicates a decline in the Naira exchange rate compared to the current rate.

The black market rate plays a crucial role for investors and participants, offering a real-time reflection of currency dynamics outside official or regulated exchange channels.

Monitoring these rates provides insights into the immediate value of the Naira against the dollar, guiding decision-making processes for individuals and businesses alike.

It’s important to note that while the black market offers valuable insights, the Central Bank of Nigeria (CBN) does not officially recognize its existence.

The CBN advises individuals engaging in forex transactions to utilize official banking channels, emphasizing the importance of compliance with regulatory frameworks.