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Forex Weekly Outlook December 5-9

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  • Forex Weekly Outlook December 5-9

The US economy continued its positive run last week, adding 178,000 jobs in November, and reducing its unemployment rate from 4.9 percent to a 9 year low of 4.6 percent. While the economy grew at a 3.2 percent annualize rate in the third quarter, more than the 2.9 percent initial estimations. The consumer confidence also surged to 107 from 100.8 in November, validating continuous job creation, even though wages dropped to -0.1 percent. The economy remains strong and in line with the Federal Reserve’s projection for interest rate hike in December.

However, the Organization of Petroleum Exporting Countries (OPEC) consensus on crude oil production cut last week, aided currencies of commodity dependent nations against the U.S dollar and bolstered emerging markets. This, first production cap agreement in 8 years is imperative to the financial market and expected to increase oil prices to about $55 a barrel in 2017 — provided non-OPEC members also agreed to production cap next week in Doha, Qatar.

In Canada, the economy expanded at an annualized rate of 3.5 percent in the third quarter and added 10,700 jobs at 6.8 percent unemployment rate. Boosted by the surge in crude oil prices, the Canadian dollar rebounded against the U.S dollar to close at 1.3282 last week and poised to continue this week as the financial markets price-in OPEC deal in relation to Canada economic progress.

In the UK, the manufacturing sector expanded by 53.4 in November, but below projected 54.4. The weak pound continued to impact production cost as manufacturers had to up prices charge for goods to accommodate surges in the cost of imported raw materials due to the difference in foreign exchange rate. Nevertheless, the Markit report showed companies from Europe, the Middle East and the US ordered more and projected to maintain current level going forward. This combined with Brexit Secretary David Davis assertion that the U.K would secure access to the EU single market post-Brexit, bolstered pound to a two-month high against the U.S dollar last week. Again, this is another indication of how vulnerable the pound will be in a series of comments from policy makers as the U.K prepared to trigger article 50 in March, 2017.

Therefore, traders are advised to pay attention to changes in economic policies as the U.S, U.K, Italy, France, Japan etc. adjusts their policies to better accommodate present market reality.  Meanwhile, this week NZDCAD and EURGBP top my list.

NZDCAD

This commodity dependent pair stand-out for several reasons, one, Canadian currency/economy has picked up after Alberta’s wildfire, and projected to do better as OPEC and non-OPEC strive to reach consensus on production cut. Two, all through this year I have emphasized why the Kiwi is overpriced and the reason it will eventually pared gains, and aligned with the reserve bank of New Zealand foreign exchange rate projection. While, emerging economies are expected to get a boost from the surged in commodity prices and rebound in the manufacturing sector, Canada is at the heart of it all and forecast to do even more, especially with Trump plans to increase productivity in the U.S — Canada largest trading partner, the Canadian manufacturing sector is expected to once again come alive and continue to support job growth and income, which will eventually encourage consumer spending and spur inflation from the current low.

Forex Weekly Outlook December 5-9

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Technically, this pair has lost about 529 pips, after peaking at 0.9923 three weeks ago — closing as doji below 0.9505 psychologically level last week. This week, I am bearish on NZDCAD as long as 0.9505 new resistance holds, with 0.9298 as the target.

EURGBP

This pair topped our list last week and since then has lost about 101 pips in our favour to close bearish at 0.8373, this week I remain bearish on EURGBP, one, the Italy referendum, France election, Greece economic issues, among other Europe economic struggle are likely to weigh more on the Euro single currency against the British pound this week. Another reason is the current pound position, the U.K economy/currency continued to differ post-Brexit catastrophe and pared losses.

Forex Weekly Outlook December 5-9

Click to enlarge

 

This week, as long as 0.8471 holds, I am bearish on EURGBP, with 0.8240 as first target and 0.8117 as the second target.

AUDUSD and NZDUSD

This two pair remains elusive, even with the US dollar renewed strength ahead of the Fed’s rate decision, these commodities dependent currencies remain moderately attractive and has managed to remain above comfortable sellers-price level in the last two weeks. While I remain bearish on both pairs. I will be standing aside this week to better monitor these economies in relation to a series of global happenings impacting these pairs.

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.

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Naira

Exchange Rate: Dollar to Naira Today, Friday 3 December 2021

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The Nigerian Naira remained under pressure across the board despite efforts by the Central Bank of Nigeria (CBN) to prop up the value of the local currency against its global counterparts.

Backed by Nigeria’s foreign reserves, Naira plunged from N306 against the United States Dollar to N414 at the official forex window during the peak of COVID-19 when crude oil dropped to $15 a barrel and eroded Nigeria’s foreign exchange earnings.

Since then, Africa’s largest economy has instituted various forex policies to support the Naira, deepen economic productivity and generally grow activity across key sectors. However, the lack of a stable foreign exchange market has impeded capital importation needed to prop up Naira value as foreign investors continue to stay off the Nigerian market according to the World Bank.

Naira to Dollar Exchange Rate Official Fx Window (FMDQ)

On Thursday, December 2, 2021, the Nigerian Naira opened at N413.94 against the United States Dollar at the Official Forex Window managed by the FMDQ Group.

The local currency sheds 0.06 percent to a greenback by the close of business on Thursday, closing at N414.80 to a United States Dollar.

Analysing the forex spot market, Naira rose to as high as N404 against the American Dollar during the trading house of Thursday before plunging to N444. Trading activity dropped on Thursday as investors traded $139.69 million US dollars, in contrast to $223.8 million transacted on Wednesday.

Naira Black Market Exchange Rates

At the unregulated forex market, the Naira exchanged hoarders and speculators are exchanging the Naira at N558 to United States Dollar.

This was in spite of the CBN efforts at shutting down activity at that section of the forex market given its damages to the nation’s forex market and the fact that Nigerians were almost adopting the black market rate as the official rate.

Experts, including the Vice President, Yemi Osinbajo have blamed the Central Bank of Nigeria for existing of the black market. According to the Vice President, as long as the forex arbitrage exists due to the numerous forex rates, speculators, hoarders and other forex traders will continue to sustain the unregulated black market.

Central Bank of Nigeria’s Official Naira Rates

The CBN quoted rates are the rates the apex bank sells various currencies to Deposit Money Banks (DMBs) in Nigeria. The DMBs are however expected to add between N1 to N2 on each rate to cover costs when selling to customers.

Nigerian Naira (NGX) to Bitcoin (BTC)

Bitcoin, the world’s most dominant cryptocurrency, lost 0.13 percent against the Naira to N23.299 million or $56,833 in the last 24 hours.

Against Ethereum (ether), the second most capitalised cryptocurrency, the Naira gained 0.15 percent to N1.874 million.

GTBank Naira Exchange Rates

As of December 2, 2021, GTBank exchanged the Naira to the US Dollar at N480. While the Euro, the Canadian Dollar and the Great Britain Pound were traded at N549, N366 and N649, respectively since August 20, 2021. See other Naira exchange rates below.

Currency Rate Date
USD ₦ 480 02/12/2021
EUR ₦ 549 20/08/2021
CAD ₦ 366 20/08/2021
GBP ₦ 649 16/08/2021

Access Bank Naira Exchange Rates

Currency Rate Date
USD ₦ 450 17/11/2021
EUR ₦ 531 31/08/2021
GBP ₦ 621 27/08/2021
CAD ₦ 357 18/08/2021
ZAR ₦ 31 18/08/2021
INR ₦ 6 18/08/2021
TRY ₦ 52 18/08/2021
AUD ₦ 299 01/05/2021
RUB ₦ 7.10 01/05/2021
SGD ₦ 268 01/05/2021
AED ₦ 109 26/11/2020
XOF ₦ 800 15/08/2020

Sterling Bank Naira Exchange Rates

Currency Rate Date
USD ₦ 480 18/11/2021
GBP ₦ 619 18/11/2021
EUR ₦ 534 13/09/2021
CAD ₦ 344 20/08/2021

Union Bank Naira Exchange Rates

Currency Rate Date
USD ₦ 414 18/11/2021
EUR ₦ 484 13/10/2021
GBP ₦ 569.3 13/10/2021
CAD ₦ 316 01/05/2021

UBA Naira Exchange Rates

Currency Rate Date
USD ₦ 465 18/11/2021
EUR ₦ 566 31/08/2021
GBP ₦ 622 23/07/2021
CAD ₦ 316 01/05/2021
AED ₦ 119 08/08/2020
INR ₦ 6.06 03/08/2020

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Naira

Naira Sees Stability at Official Window

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Naira - Investors King

The Naira has this week witnessed a steady, unchanged value against the naira as it closed at N415.07 against the dollar on Wednesday (for the fourth straight day), according to the Investors and Exporters window where the Nigerian currency is traded officially.

As mentioned in a previous article, the Naira appears to have found a resting place for its value heading into the festive period. Even though the Naira is now stable, the value may still be too negative for the Nigerian economy, as food prices and prices for other goods keep going on the rise.

The FMDQ group through its website gives updates concerning the currency’s daily trading (opening and closing prices). It also gives updates on the Spot rate and Forward rate; the prices at which the currency trades for transactions throughout that day as well as future transactions which were agreed on that day.

The Spot rate maintained its usual highest value of N404 per dollar, but its lowest value fell as far as N457.02 per dollar. This is considerably lower than the N444 per dollar which it usually attains.

The Forward rate has however seen changes in value, dropping to a high of only N445.97 per dollar, maintaining its lowest price of N457 per dollar.

The FMDQ group also reports the total turnover of the currency in a day, i.e. the total amount of the currency that was traded throughout that day. On Wednesday, it was revealed that the total amount of the dollar that was traded sat at $223.8 million at the close of the day. This is higher than the $152 million which was recorded the previous day.

At the parallel market (which is not recognized by the Central Bank of Nigeria), the Naira was sold at a price of N558 per dollar as it looks to maintain the recovery which it made after hitting an all time low of N575 per dollar in September.

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Naira

Naira Stabilizes at N415/$1 at Official Fx Window

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Naira - Investors King

The Nigerian currency has continued its trend of closing at N415 per dollar, after it settled to close at that price (which it has closed at consistently since Friday) on Tuesday. This is according to data gathered from the Investors and Exporters window where the Naira is traded officially.

It seems to appear that the Naira has found its resting place at this price, considering the number of days at which it has closed at that particular price. It is now left to see how this currency will trade closer to the festive period.

However, this ‘stability’ cannot be held as a permanent thing, because for this price to be the new normal, it may have to be maintained over a longer period of time. The Central Bank of Nigeria should be making moves to bring the value of the naira back up again, to make things better for Nigerians and Nigeria especially as we approach the Christmas period.

The FMDQ group’s updates of the Spot and Forward exchange rates showed slight changes here and there, with nothing too heavy. The Spot rate did not see any changes from Monday, as it maintained the high of N405 per dollar and a low of N465.97 per dollar.

The Forward rate however witnessed a jump, with Tuesday’s high jumping back to N411 per dollar from N452 per dollar where it sat on Monday. The lowest of the Forward rate further fell to N457 per dollar from the N453 per dollar where it was on Monday.

Those who would benefit the most from Tuesday’s trading round are those who agreed on future deals at prices between N411 and N415 per dollar.

The daily turnover recorded by the FMDQ group on Tuesday sat at $152.98 million, more than $100 million less than the $256 million which Monday recorded.

On Tuesday, the parallel market saw the Naira trade at N565 per dollar. The Central Bank has however stated that it does not reckon with the parallel market.

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