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Forex Weekly Outlook November 7-11

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Forex Weekly Outlook November 7-11
  • Forex Weekly Outlook November 7-11

The US dollar continued to drop ahead of the US presidential election, even with a “positive” payroll report, the currency dip further. The labor market added 161,000 jobs in October, below the 174,000 expected by economists, but strong enough to validate Fed’s rate hike decision come December. This is because, the surge in wages to 2.8 percent (year-on-year) confirmed the optimum of the job market and the struggle to keep employees as employers compete for limited skilled-workers.

Also, the unemployment rate improved to 4.9 percent in October, despite the fact that the 12.1 percent of the “unemployed age group” voluntarily quit their jobs with the confidence of securing a high paying job. While, the participation rate that contributed to the 5 percent unemployment rate recorded in September declined, boosting the outlook of the job market.

However, there are discrepancies in the recent data that could change Fed’s growth approach and sustenance. For instance, productivity in the services sector fell to 54.8 in October from 57.1 percent in September, while business activity plunged to 57.7 in the same month. Even though, it still reflects expansion, stalling growth may begin to worry policy makers and prompt them to adopt what Fed Chair Yellen Janet called a “high pressure economy” during her last month speech — by going above her target for both employment and inflation in order to attract more investment and hiring to lower unemployment even further.

Nevertheless, the November 8 presidential election could change the entire global economic outlook and compel investors and businesses to adopt new growth model as they strive to comprehend the new government policy from the world largest economy. This week, high volatility is expected across board, but a Clinton presidency should stabilize the markets and reinforce the likelihood of the Fed’s raising rates in December and vice versa.

In the UK, the pound climbed on Thursday following the Bank of England (BoE) decision to leave interest rate unchanged at 0.25 percent, and a court ruling stopping the Prime Minister Theresa May from triggering article 50 of the Britain’s exit from the European Union without the U.K. parliamentary approval. While, the pound might extend its gains in the coming days as investors scramble to cover their short positions, the downward pressure is likely to persist due to economic uncertainty surrounding Brexit.

Accordingly, depreciation of the pound is expected to boost exports and reduce imports as UK products become affordable for overseas buyers and Britons choose to purchase locally made products, rather than expensive imported alternatives. Therefore, trade balance deficit is expected to exceed current level by 2017.

While, the U.K. fundamental point to growing economy with solid manufacturing sector (54.3), resilience services sector (54.5) and economic growth rate of 0.5 percent in the third quarter, the unexpected progress post-Brexit could be affected by the uncertainty in the UK economic outlook, and worsen if the country had hard-Brexit – ‘leaving the European Union without access to the single largest market of approximately 500 million consumers.’

“This is because EU deals are the biggest determinant of the UK economic outlook going forward.”

In Japan, the Bank of Japan held its annual 80 trillion yen ($764 billion) bond-buying program unchanged, while delaying the timing for reaching its 2 percent inflation target. Despite, inflation falling 0.5 percent in September — for a seven straight month and consumer spending declining 1.9 percent, the apex bank remained resolute in its current monetary policy (controlling short- and long-term rates and its asset-purchase programs).

According to the Bank of Japan Governor, Haruhiko Kuroda, the institution didn’t take additional monetary measures because the outcome of the US election will not just affect the U.S. economy but would have important implications on global economy, hence, the apex bank is keenly monitoring the outcome in relation to the global economic reaction to these developments.

In lieu of global developments ahead of US presidential election this week, the yen, will continue its gains against the US dollar and other perceived high-risk currencies as investors increase their holdings of haven assets in an effort to avert Brexit similar occurrence.  This week, AUDJPY and USDJPY top my list.

AUDJPY

On July 4th, I mentioned the significance of AUDJPY descending channel here, ever since, this pair has traded within the channel. Last week, AUDJPY failed to sustain its gains above 80.82 resistance, closing once again below the established channel as a bearish pin bar — this further validated the significance of the descending channel to the economic outlook of the pair.

Forex Weekly Outlook November 7-11

Another reason why this pair holds potential, is the increasing global uncertainty and risk ahead of the U.S. presidential election. Naturally, investors are risk averse, and gravitated towards haven assets to avert possible loss in case there is disparity in the outcome of the election and market expectation. In this case, the yen is a better haven asset and likely to attract more buyers this week.

This week, I am bearish on the AUDJPY as long as price remains below 80.82 resistance, I will be looking to sell below last week close of 79.08 for 76.25 as the target.

USDJPY

Last week, the US dollar lost 249 pips against the yen to close at 103.03, the lowest in a month. While, the US economy is vibrant, the uncertainty surrounding the election continued to weigh on the currency and has plunged it against all the majors. This week, I am bearish on USDJPY, one, because of the possibility of the pair to drop further as investors increase their holding of Japanese yen, while assessing the U.S. election result.

Forex Weekly Outlook November 7-11

This week, I will be looking to sell around 102.68, below 20-day moving averages, while targeting 101.47 first, with 100 as the second target. But a Clinton presidency will void this analysis and solidify the US bullish run.

 

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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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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Naira

President Buhari Unveils New Redesigned Naira Notes, See Pictures

Buhari launched the new naira notes as the CBN forges ahead with redesign plans.

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New Naira Notes

President Muhammadu Buhari on Wednesday unveiled the new redesigned Naira notes at the State House in Abuja following a series of sensitisation to ensure that Nigerians are aware of the deadline for the old notes.

New Naira Notes

Godwin Emefiele, the governor of the Central Bank of Nigeria, who was also present at the launching explained that the redesigned notes would help curb counterfeit, reduce hoarding and support the apex bank’s cashless policy.

Earlier in October, the central bank announced it was redesigning the N200, N500 and N1,000 notes in line with its mandate. The apex bank further stated that the newly redesigned notes would be available on December 15, 2022.

However, Emefiele later announced the central bank won’t wait until December 15th before unveiling the new notes on November 2023.

He said, “100 days is enough for any person from any part of Nigeria to deposit his money in the bank and get his money when the new notes are released.

“For information, indeed, we are no longer waiting till December 15th to unveil and begin to release the new notes.

“By the special grace of God, tomorrow, which is the 23rd of November 2022, the President has graciously accepted to unveil the new currencies and the new currencies will be unveiled tomorrow at the Federal Executive Chamber by 10am.”

New Naira notes

Meanwhile, the central bank-led monetary policy committee raised interest rates by another 100 basis points from 15.5% to 16.5%. Bringing the total increase in 2022 to 500 basis points despite the challenges Nigerians are facing amid weak job creation and poor earnings.

The committee claimed the decision was based on the rising inflation rate that rose to 21.09% in October. However, given Nigeria’s economic structure and current situation, the persistent increase was mainly to lure foreign investors to invest in the economy against the developed economies that are equally raising rates to curb escalating inflation.

 

New Naira notes

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Naira

President Buhari to Launch New Naira Notes Today

CBN says Buhari is expected to introduce redesigned naira notes to the public today at the Federal Executive Council (FEC) meeting in Abuja.

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President Buhari - Investors King

Nigerian President, Muhammadu Buhari is expected to launch the redesigned naira notes today at the Federal Executive Council (FEC) meeting in Abuja.

The launch will precede the circulation of the affected currency which is billed for December 15, 2022. The FEC meeting is a weekly (Wednesday) meeting of the executive arm of government often presided over by the President or the Vice President.

The Central Bank Governor, Godwin Emefiele disclosed on the sidelines of the Monetary Policy Committee (MPC) meeting held in Abuja on Tuesday, that the new naira notes will be displayed for public view on Wednesday. 

Therefore, the governor added that the CBN will not shift its deadline for all old notes to be returned to commercial banks in exchange for newly designed ones.

Investors King recalls that in October 2022, the central bank announced it will issue redesigned N200, N500, and N1,000 notes, effective December 15, 2022, while the new and existing currencies will remain legal tender and circulate together until January 31, 2023.

However, in a sudden change of schedule, the CBN governor noted that the unveiling will be done by the president today stating that the bank will no longer wait till December 15th to unveil and begin to release the new notes.

” By the special grace of God, tomorrow, (today) which is the 23rd of November 2022, the President has graciously accepted to unveil the new currencies and the new currencies will be unveiled tomorrow at the Federal Executive Chamber by 10am.” Emefiele started.

Meanwhile, the Monetary Policy Committee (MPC) which is the highest decision-making body for any issues related to Nigerian monetary policy has hiked the interest rates from 15.5 percent to 16.5 percent. 

According to CBN, the hike in interest rate is to curtain inflation and maintain economic stability. 

Speaking at the end of a two-day Monetary Policy Committee meeting yesterday, the CBN governor noted that the MPC voted to retain the cash reserve ratio at 32.5 percent and the liquidity ratio at 30 percent.

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