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Forex Weekly Outlook November 21-25

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Last week, I had technical issues. So this week I am going to give an overview of the financial market post-election.

Since Donald Trump emerged the 45th president of the United State of America, a lot has changed in terms of how investors, businesses and traders approach the financial market. Here are possible effect of Donald Trump proposed policies on the world’s largest economy in relation to global foreign exchange market.

Tax Cut

The president-elect plans to cut taxes by the most, and make changes to tax law, while this will help create more jobs and boost economic growth rate going forward, it will also widen the US trade deficit by about $1 trillion over a period of 10 years. This is likely to meet a stumbling block, since changing tax law requires approval of both houses of Congress, and Senate. Again, Federal Reserve Chair Yellen Janet has repeatedly warned of the consequences of running the economy with high deficit. According to her, with the debt to GDP ratio currently at about 77 percent, there is little to no room for additional fiscal measure should a shock to the economy occur. Hence, Trump is likely to push for minimal changes, like he announced on Obamacare after their meeting.

Trans-Pacific Partnership

Accordingly, the Trans Pacific Partnership deal could suffer a setback after 7 years of painstaking negotiation. If Trump failed to realize the US equally needs the other 11 nations to bolster its weak manufacturing sector and offset the deficit created by a drop in the global commodity prices. For instance, a bilateral agreement between Australia and Japan, gives Australian beef exporters a price advantage over their American counterpart whose exports are subject to higher tariffs. According to the National Cattlemen’s Beef Association, without T.P.P the association is losing about $400,000 a day, now multiply that over hundreds of products and several dozens of free-trade relationships that is likely to be affected if Trump jeopardize the agreement. Not only would the 11 nations fight back, countries like China will restrict US products that can be produced locally from its market  and support local manufacturers by forming an alliance with other nations like President Xi Jinping and Russia’s Vladimir Putin are already doing in Lima, Peru at Asia-Pacific Economic Cooperation summit in the South American city to negate the possible effect of TPP on their economy per adventure the US renege.

Immigration

Subsequently, it will affect NAFTA trade agreement and visa attached to it. Also, if H-1B visa is overhauled as promised by the president elect during his campaign, the Silicon Valley will be the most affected as more than half of the US startups estimated at about $1 billion have an immigrant founder, and the companies getting the most of H-1B visa, with about 80,000 granted every year to these companies.

Likewise, the US is home to about 15 million immigrants with 11 million of those undocumented. While Trump won’t build walls, he has pledged to aggressively enforce existing laws towards undocumented residents and deport about 3 million, this includes identification checks which could substantially hurt some of the US industries, like agriculture, foodservices and hotels, that depend largely on undocumented lowly paid immigrants to function. This move, will impact services sector that has aided the economy since recession and disrupt Trump proposed increase in productivity as unemployment rate is near all-time low, and has forced employers to raise wages to retain and attract desirable employees.

Economy

The US economy remains vibrant after a series of positive economic data shows continuous growth post-election, and a surge in inflation towards Fed’s 2 percent target. Although, producer prices were unchanged in October due to drop in services cost, data showed more jobs were being created even with rising wages. This was further validated by a 40-year low unemployment claims (235,000) recorded in the week ended Nov.11, while consumer spending remains strong following a 0.8 percent increase in October and 4.3 percent on a yearly basis.

This, has increased the odds of the Fed raising interest rate in December to almost 100 percent – especially with the Federal Chair signaling possible rate hike if incoming data provide further evidence of continued growth. This week, the US dollar is expected to gain against its counterparts as investors continue to jump on it in anticipation for possible rate hike. However, traders are advised to pay attention to the U.S political event in case Trump makes comments that could halt current gains.

In the UK, consumer prices unexpectedly rose (0.9%) less than forecast in October even with the weaker pound. However, consumer spending rose more than expected to 1.9 percent, suggesting household spending is still strong. Accordingly, unemployment rate fell to 4.8 percent in the third quarter, its lowest in 11 years. Nevertheless, the number of jobs added (49,000) was half the number expected and down from 172,000 jobs added in the second quarter, indicating the labour market might be cooling, with employment growth slowing as Prime Minister Theresa May’s March 2017 date for triggering article 50 of Brexit approaches.  The U.K. uncertainty and risk remain high as investors and businesses awaits EU-U.K deal ahead of official Brexit.

Overall, the financial markets remain uncertainty as the world awaits Italy referendum alongside Brexit deal and the U.S new president that has sworn to change current policies. This week, AUDUSD and NZDUSD top my list.

AUDUSD

Last month, I mentioned this pair sell opportunity, but after hitting our first target at 0.75059 it rebounded, reaching as high as 0.7777 last week. This week, with the odds of the Fed’s raising rates jumping to 100 percent from 68 percent in the previous week, this pair is likely to continue its downward trend towards 0.7203 support. Another good reason is that the Aussie dollar is a natural safe haven, but as investors are increasing their US dollar holding, demand for the Australian dollar is expected to drop this week.

Forex Weekly Outlook November 21-25

Click to enlarge

This week, as long as 0.7379 resistance holds, I am bearish on AUDUSD with 0.7203 as the target.

NZDUSD

Also, this pair sell opportunity was discussed weeks ago, and since then this pair has lost 402 pips, but I think this pair has room for additional 409 pips, if 0.6989 support, below the ascending channel started over a year ago is broken this week. This week, I will be looking to sell below the 0.6989 for my first target 0.6771 and then 0.6580 second target.

Forex Weekly Outlook November 21-25

Click to enlarge

 

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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Forex

Bureau De Change Operators Demand CBN Reversal on New Capital Requirement

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Bureau De Change Operator

In a move that underscores growing tensions between the Central Bank of Nigeria (CBN) and the Association of Bureau De Change Operators of Nigeria (ABCON), the latter has vehemently demanded the reversal of the new capital requirements set forth by the apex bank.

The CBN recently issued fresh guidelines for the operations of Bureau De Change (BDC) operators, introducing two new categories of licenses with significantly higher capital bases.

The Tier 1 category necessitates a minimum capital requirement of N2 billion, alongside non-refundable application and license fees of N1 million and N5 million, respectively.

Similarly, Tier 2 BDCs are mandated to maintain a minimum capital base of N500 million, with corresponding fees.

This move by the CBN has elicited strong opposition from BDC operators, who argue that the new requirements pose a significant threat to their businesses.

During a virtual meeting themed “New CBN Regulatory & Supervisory Reforms for BDCs: Challenges and Way Forward,” the association presented recommendations aimed at addressing their concerns.

ABCON President, Aminu Gwadebe, emphasized the urgency of the situation, demanding the immediate reversal of the financial requirements.

He proposed a return to the previously submitted proposal, suggesting capital thresholds of N500 million for Tier 1, N100 million for Tier 2, and N35 million for Tier 3.

Also, he advocated for existing BDC owners to be given the opportunity to recapitalize instead of reapplying for licenses.

The association further urged the CBN to recognize the existing N35 million capital requirement and incorporate it into the recapitalization process.

They called for a nationwide enlightenment campaign to allay investors’ fears and an extension of the compliance timeline to two years for fairness. Furthermore, existing BDCs should be permitted to retain their generic names, and the terms of engagement for mergers and acquisitions clarified.

Operators expressed outright rejection of the new guidelines, with concerns raised about the CBN’s perception of their role in the financial sector.

Ibrahim Bala voiced the collective sentiment, labeling the guidelines as unacceptable, while Kayode Taiwo questioned the government’s motives behind the capital hike.

In response, the CBN defended its stance, emphasizing the importance of corporate governance and compliance with anti-money laundering regulations for BDC operators.

As the standoff between BDC operators and the CBN intensifies, the outcome of this dispute will likely shape the future landscape of Nigeria’s foreign exchange market.

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Naira

Black Market Dollar (USD) to Naira (NGN) Exchange Rate Today 29th May 2024

The black market, also known as the parallel market or Aboki fx, US dollar to Nigerian Naira exchange rate as of May 29th, 2024 stood at 1 USD to ₦1,520.

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New Naira Notes

The black market, also known as the parallel market or Aboki fx, US dollar to Nigerian Naira exchange rate as of May 29th, 2024 stood at 1 USD to ₦1,520.

Recent data from Bureau De Change (BDC) reveals that buyers in the Lagos Parallel Market purchased a dollar for ₦1,510 and sold it at ₦1,500 on Monday, May 28th, 2024.

This indicates a decline 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: ₦1,520
  • Selling Rate: ₦1,510

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.

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Naira

Black Market Dollar (USD) to Naira (NGN) Exchange Rate Today 28th May 2024

The black market, also known as the parallel market or Aboki fx, US dollar to Nigerian Naira exchange rate as of May 28th, 2024 stood at 1 USD to ₦1,510.

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on

Naira Exchange Rates - Investors King

The black market, also known as the parallel market or Aboki fx, US dollar to Nigerian Naira exchange rate as of May 28th, 2024 stood at 1 USD to ₦1,510.

Recent data from Bureau De Change (BDC) reveals that buyers in the Lagos Parallel Market purchased a dollar for ₦1,520 and sold it at ₦1,510 on Monday, May 27th, 2024.

This indicates an 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: ₦1,510
  • Selling Rate: ₦1,500

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.

Continue Reading
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