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Forex Weekly Outlook January 23-27

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  • Forex Weekly Outlook January 23-27

Last week, the US data showed inflation rate rose 0.3 percent in December, while industrial output rebounded from 0.7 percent to 0.8 percent, with a capacity utilization rate of 75.5 percent. Although, the economy continued to churn out data in-line with the Federal Reserve projection for maximum employment and price stability, the US dollar dip during the week.

This is because the uncertainty surrounding the new administration’s likely policy going forward and global events like Theresa May’s proposed Brexit’s exit strategy is hurting the attractiveness of the dollar.

However, the Federal Reserve Chair, Yellen Janet, said with the unemployment rate nearing its longer-run normal level and likely to move a bit lower this year, the labor market remains healthy and will continue to create more jobs. This is one of the reasons investors are positive the Fed will raise rates at least 3 times this year, hence, the surge in demand for bonds.

In the UK, the Prime Minister Theresa May on Tuesday pitched post-Brexit strategy to the world and finally succumb to pressure to allow the parliament to vote on the final Brexit deal, a clause that changed the mid-term outlook of the pound as businesses, investors and stakeholders believe the deal has to be inclusive before parliament will approve it. This bolstered the pound to its highest two-day rally since 2009.

While, the UK economy continued to sustain its 4.8 percent unemployment rate, rising average earnings of 2.8 percent from 2.6 percent and strong consumer spending. The governor of the Bank of England Mark Carney sees weaker growth and rising inflation rate in 2017. Largely, the pound outlook remained uncertain as the country gets ready to exit the European Union 500 million consumers’ market.

In China, the economy grew by 6.8 percent in the 4th quarter of 2016, beating 6.7 percent forecast by analysts. While, on a yearly basis the industrial output rose by 6 percent, slightly below the 6.2 percent recorded a year earlier. The Chinese economy remains moderately strong as capital outflow that saw about $305 billion leave the economy in 2016 has started declining, while fixed asset investment surge to 8.1 percent (ytd).

Overall, the global financial is expected to remain uncertain until investors can deduce succinctly the direction of central banks’ policies, and most importantly the series of changes the 45th president of the United States of America will be making to fiscal policy.

GBPUSD

Last week, the pound gained 431 pips against the US dollar after Theresa May’s speech on Brexit strategy. But the pair remains below the 1.2534 resistance level that doubled as 20-day moving average.

Similarly, the drop in demand for the US dollar contributed to the pound gain, which means an increase in dollar demand this week could dampen the pound progress and reinforce the continuation of long-term bearish trend.

Forex Weekly Outlook January 23-27

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However, sustained break of 1.2534 resistant levels, will likely increase buyers’ interest and open up 1.2809 resistance levels as target 2. But failure to break 1.2534 will increase sellers’ interest. So this week, I will be monitoring price action alongside comments from policy makers to trade GBPUSD.

CADJPY

The series of data released last week showed Canadian economy is still struggling with weak inflation rate (-0.2%) and low consumer spending. Although, the manufacturing sector has started picking up, but the uncertainty surrounding crude oil and the increase in demand for haven asset continued to aid CADJPY.

Forex Weekly Outlook January 23-27

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This week, I am bearish on this pair as long as 86.36 resistance holds. While looking to sell below 86.03 price levels for 84.04 targets.

Last Week Recap

GBPJPY

The prime minister May’s comment bolstered all pound against its counterpart last week, hence, invalidating our projection for this pair. This week, I will stand aside to monitor price action better.

Forex Weekly Outlook January 23-27

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USDJPY

This pair retraced 4 days to the inauguration after dropping about 180 pips. This week, I remain bearish on this pair and will look to sell below 114.43 support level.

Forex Weekly Outlook January 23-27

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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

Naira Exchange Rates; Monday, June 21, 2021

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Naira Dollar Exchange Rate - Investors King

The Nigerian Naira continues its decline against global counterparts after gaining on the back of the Central Bank of Nigeria’s proposed increase in foreign exchange supply to all forex operators across the country.

Naira gained on the parallel market to exchange at N493 against the United States Dollar on Tuesday 15, June 2021 before dropping to N497 on Wednesday 16, June 2021.

The local currency plunged as low as N502 to a United States Dollar on the parallel market before the CBN announced its plans to up liquidity in an effort to ease scarcity and speed up business activities in the largely import-dependent economy. See the Naira exchange rates across various sections of foreign exchange markets.

Naira Black Market Exchange Rates

Morning * Midday** Evening *** Final Rates

Date USD GBP EURO YUAN Canadian Australian
NGN BUY/SELL BUY/SELL BUY/SELL BUY/SELL BUY/SELL BUY/SELL
21/06/2021 495/500 703/710 585/592 62/69 400/410 300/325
18/06/2021 492/498 700/710 585/595 62/69 400/410 300/325
17/06/2021 483/493 700/710 590/600 62/69 400/410 300/322
16/06/2021 497/502 707/713 600/606 62/69 400/410 300/322

Bureau De Change Naira Rates

Date USD GBP EURO
NGN BUY/SELL BUY/SELL BUY/SELL
21/06/2021 480/90 680/710 550/603
19/06/2021 475/490 680/715 580/603
18/06/2021 475/485 680/715 580/603
17/06/2021 478/490 690/710 590/603
16/06/2021 495/500 707/718 600/609
15/06/2021 495/500 707/718 600/609
14/06/2021 490/498 705/718 600/608

Central Bank of Nigeria’s Official Naira Rates

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Forex

Travellers to Access $4k , Businessmen $5K as CBN Boosts Forex Supplies

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US dollar - Investors King

Nigerians travelling abroad can access a maximum amount of $4,000 foreign exchange from the banks following the Central Bank of Nigeria’s announcement to increase forex supplies.

Sources from some of the banks said those travelling on business trips could also access a maximum amount of $5,000 for each trip.

The CBN had said in a recent statement that it had concluded plans to increase the amount of foreign exchange allocated to banks to meet legitimate needs.

This followed the warning by the CBN Governor, Mr Godwin Emefiele, to Deposit Money Banks to desist from denying customers the opportunity to purchase foreign exchange.

The purposes to access forex included Personal Travel Allowance, Basic Travel Allowance, tuition fees, and medical payments as well as Small and Medium Enterprises transactions or for the repatriation of Foreign Direct Investment proceeds, the CBN had stated.

At a virtual Bankers’ Committee meeting last week, the bankers discussed how the CBN intended to assist with forex to ensure availability for the upcoming summer period and the return of students to school in September.

The CBN also said the BDCs would continue to have their weekly allocations.

The committee observed that the rates were going up.

It stated, “The CBN has said that all the banks must make available at all times and anyone who wants to buy BTA, PTA, medical fees, student school fees and all the eligible invisible purchases to ensure that Nigerians are not forced to go and queue in the parallel market.

“So what the Central Bank is doing is to encourage all banks to make sure that there is available forex at all times, and that his information should be communicated on all our platforms.

“We are asking our customers to come to the branches and for BTA, for example, present the required documents, which are basically your international passport, your visa, your valid ticket and fill up the form in the bank.

“And what we have been instructed to do is ensure that we don’t turn anybody back and that we should request from the Central Bank once we exhaust the forex that we have.

“The idea is to have a hitch-free summer period and the resumption for children to go back to school. The idea is to ensure there is less pressure on the forex and then the rates will come down.”

Speaking during the virtual meeting, the Group Managing Director, Access Bank, Herbert Wigwe, said, “I think again as part of the central bank’s role in terms of price stability and the need to support small and medium enterprises, there was a highlight of the need for banks to go and support SMEs who import small raw materials for them to set up their businesses.”

The Managing Director, Ecobank, Patrick Akinwuntan, said, “All banks are available to ensure forex need is met.”

Managing Director, Sterling Bank, Abubakar Suleiman, said the CBN had provided sufficient foreign exchange to meet the needs of all legitimate Nigerian travellers and therefore, the idea of going to any other market should not arise at all.

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US Dollar

U.S Dollar Gained as Fed Shifts Interest Rates Hike from 2024 to 2023, Crypto Drops

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Dollar Cryptocurrency - Investors King

The United States Dollar gained on Thursday after the Federal Reserve raised inflation expectations to 3.4 percent and moved the year it is expected to raise interest rates from 2024 to 2023.

Policymakers suggested that interest rates could be raised twice by late 2023 given “Summary of Economic Projections” (SEP) released on Wednesday.

The dollar index, which tracks the greenback against six major currencies, gained 0.63 percent to 91.103, its highest since May 6.

The jump was as a result of renewed interest in the American economy as growth is expected to hit 7 percent in 2021 despite the rising inflation. Similarly, economic conditions are projected to improve faster than initially predicted.

The Federal Reserve Chair Jerome Powell said “the economic conditions in the committee’s forward guidance will be met somewhat sooner than previously expected.”

The interesting thing is that the Fed has gone beyond simply acknowledging that inflation is rising and that the U.S. economy has a lot of momentum, and it has essentially shifted to a much more hawkish stance in this set of projections,” said Karl Schamotta, chief market strategist at Cambridge Global Payments in Toronto.

Powell said the central bank will maintain its $120 billion monthly bond-buying program to continue to support the economy but also suggested the possibility of pulling back on quantitative easing used to keep rates low.

I think we’re back to talking about a mild rally in the U.S. dollar and the data becoming very important over the summer period prior to Jackson Hole and September’s meeting,” said Simon Harvey, senior FX market analyst at Monex Europe.

Billions Flow Out of Crypto Market Ahead of Better US Economy

Investors are moving money in billions out of the crypto market, according to Whale Alert reports. On Thursday, 26,999,9990 USDT valued at $26,999,990 was transferred from Binance to an unknown wallet while another 19,999,995 USDT transferred from Bitfinex to an unknown wallet.

Investors moved 20,000,000 USDT to Bitfinex; 55,180 Ether worth $134,030,121 from an unknown wallet to another unknown wallet and 55,000 Ether estimated at $133,389,506 was also transferred to an unknown wallet in the early hours of Thursday.

5,000 Ether worth $12,168,082 and 1,000 Bitcoins worth $38,953,357 were transferred from an unknown wallet to Binance. To see the rest of the money being moved out of crypto space visit Whale Alert.

Cryptocurrency market capitalisation dipped by 5.03 percent in the last 24 hours but has lost $898 billion from $2.523 trillion it attained on Wednesday, May 12, 2021, to $1.625 trillion on Thursday, June 17, 2021.

The plunge in cryptocurrency was a result of improving global economic outlook, especially in the United States of America, the largest crypto investing nation.

The unregulated crypto space is largely treated as a haven asset to avert disaster during the global downturn. Meaning, an improvement in the global economy will generally impact cryptocurrency capital inflow and overall performance. Investors King expects cryptocurrency to extend its decline in the third quarter.

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