- 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.
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.
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.
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.
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.
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.
Akinwumi Adesina Extols Africans in Diaspora on Cross-Border Remittance
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.
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
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”.
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
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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