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Forex Weekly Outlook December 12-16

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Euro currency
  • Forex Weekly Outlook December 12-16

As the world awaits the Federal Reserve rate decision this week, the U.S economy continued to churn out positive economic data amid Trump’s proposed fiscal spending in 2017. The services sector expanded (57.2) the most in over a year in November, while the US factory orders rose 2.7 percent in October, the highest in 1-1/2 years. Also, a gauge of confidence in the economy showed that consumers’ sentiment surged 4.5 percent in December to 98 percent, a little below 2015 high, which was the highest since 2004. These data confirmed the resurgence in the U.S economy and validated manufacturing sector recovery as investors continue to increase their stocks holding ahead of Trump presidency.

Although, experts have said uncertainty surrounding incoming administration’s policy in early 2017 will fuel market volatility as businesses and investors continue to position for business tax cuts and an aggressive fiscal stimulus package. However, the possibility of rate increase having substantial impacts this week is minimal, this is because the financial market as a whole has shifted focus to a series of policies president-elect planned to implement as he attempt to stimulate the economy through aggressive fiscal spending and job creation in January.

Again, this week the Federal Reserve is expected to increase rates by 25 basis points to 0.75 percent on Wednesday. Also, retail sales, producers’ price index, building permits and inflation rate data are due this week.

In the Euro-area, the European Central Bank (ECB) president, Mario Draghi, last week announced the extension of asset buying program that was scheduled to end in March 2017 to December 2017. According to the president, an adjusted quantitative easing program will begins on April 2017 at €60 billion a month up till December 2017. Down from the on-going €80 billion asset-purchasing program.

While the Euro-area economic outlook remains vague with a low inflation rate and weak manufacturing sector, the president forecast an accelerated inflation rate of 1.7 percent in 2019 from present 0.2 percent. This decision prompted investors to doubt the region monetary space to react to possible uncertainty in-case incoming economic data digress from projection.

Again, the statement that purchases would continue beyond 2017 if the institution deem it fit to lift inflation back towards its target per adventure this extension failed to materialize, further cast doubt on the economic stability of the region and encourage sell-off of the Euro currency against its counterparts last week. Especially with the Federal Reserve likely to raise interest rates this week, the market is anticipating possible parity of the EURUSD pair.

In Australia, the economy contracted 0.5 percent, after data showed slow growth amid subdued investment outlook and low inflation rate in the third quarter. The Reserve Bank of Australia Governor attributed the negative growth rate to temporary swing, therefore, leaving the cash rate at a record low of 1.5 percent on Tuesday. This week, I will be looking to trade EURCAD and AUDUSD.

EURCAD

This pair has lost about 1370 pips within 5 weeks and closed below 1.4070 support level established since November 2015, after the ECB extends its quantitative easing program last week. While, the Canadian dollar on the other hand has recovered from previous lows, following a successful production cut by both OPEC and non-OPEC. Again, economic data from Canada showed the economy has bounced back from Alberta wild fire with the manufacturing sector gradually improving.  Also, the Euro-area is currently going through political uncertainty – France and Italy election, Greece financial woes and Brexit. Hence, the reason I sold this pair on Wednesday last week, but this week I am maintaining my bearish outlook on this pair as long as 1.4070 resistance holds, with 1.3742 as the target. I believe once the market digests the news of OPEC and non-OPEC reaching consensus over the weekend that the Canadian dollar will get a boost.

Forex Weekly Outlook December 12-16

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AUDUSD

This pair failed twice to breach 0.7505 resistance in the past two weeks, and further weighed upon by the 0.5 percent negative growth rate recorded by the Australian economy in the third quarter of the year, the first time in 25 years. Although, the Reserve Bank of Australia Governor Philip Lowe said it was a temporary swing, but few experts have questioned the economic stability of the Aussie and call for more a proactive approach. Whereas, the US dollar is likely to get a boost from the Federal Reserve this week.

Forex Weekly Outlook December 12-16

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Again, at 74 cents to a US dollar, Aussie dollar is a little overpriced. This week, I will be looking to sell this pair as long as 0.7505 hold for 0.7379 first target and 0.7203 as the second target.

Last week Recap

EURGBP

This week, I remain bearish on EURGBP as long as 0.8471 holds and will be targeting 0.8240 support as discussed last week, a sustained break of that should open up 0.8117 level.

Forex Weekly Outlook December 12-16

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NZDCAD

This pair topped our list last week, but fell short of our target. This week, as long as 0.9505 resistance is intact I am bearish on this pair with 0.9298 as the target.

Forex Weekly Outlook December 12-16

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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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Forex

Akinwumi Adesina Extols Africans in Diaspora on Cross-Border Remittance

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Akinwunmi Adesina - Investors King

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. 

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eNaira

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

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enaira

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”.

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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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