Connect with us

Forex

Forex Weekly Outlook February 20-24

Published

on

U.S dollar - Investors King
  • Forex Weekly Outlook February 20-24

The US dollar gained against its counterparts last week, after data showed producers price index rose 0.6 percent and inflation also surged 0.6 percent in January. Buttressing the general perception that increased in gasoline cost will pressure consumer prices above the Fed 2 percent inflation target and force the FOMC to adjust interest rates.

However, wage growth remained below projection, plunging to 2.5 percent from 2.8 percent recorded in December, which is capable of hurting consumer spending (0.4%) that has been supporting the economy if the Fed hike rate with declining wages. Therefore, it’s unlikely the fed will move this March as widely speculated, however, Trump new tax policy due to be announced this week can change this view.

On tax policy, the possibility of law makers cutting corporate tax to 20 percent from current 35 percent and the Fed’s hawkish outlook boosted the attractiveness of the US dollar last week. Although, retail business owners are worried that the proposed border tax on import goods will hurt revenues and subsequently affect wages, law makers insisted it will help generate about $1 trillion needed to reduce the deficit. Hence, it is hard to quantify or deduce the US dollar direction ahead of new tax policy.

In the UK, the consumer spending (0.3%) that has been supporting the economy dropped for a third consecutive month in January, signaling that post-Brexit resilience is gradually coming to an end as high consumer prices (food and fuel) seems to have started hurting purchasing power even before March – stipulated date for triggering Brexit.

Consequently, job creation is gradually slowing down, according to the statistics office report for the final quarter of 2016. Also, pay growth fell to 2.6 percent in the same quarter, while labour market is still strong, the pace has cooled in recent time over Brexit uncertainty. Therefore, this is expected to weigh on the British Pound and render it unattractive as investors continued to look elsewhere to avert lost.

In New Zealand, consumer spending remains steady in the last quarter of 2016. Rising 0.8 percent, but the New Zealand dollar declined against its counterparts after RBNZ governor said the continuous gain of the currency could impede growth. Prompting traders to sell-off the haven currency. Overall, the global financial market remains vague ahead of Europe uprising and uncertainty in the US.

This week, GBPUSD and NZDJPY top my list.

GBPUSD

The series of events happening in the Euro-area continued to weigh on the pound outlook. However, Brexit and drop in consumer confidence standout. Whereas the US dollar remained strong and likely to continue so.

Forex Weekly Outlook February 20-24

Click to enlarge

Technically, after the pair peaked at 1.2773 in December, its highest post-Brexit, it has lost about 363 pips and failed to top 1.2704 price levels attained this February. Again, the pair is trading below 20-days moving average on the daily candlestick and closed below weekly 20-days moving average, after the doji formed two weeks ago. Indicating the pressure is on the downside as the U.K. prepare to trigger article 50 next month.

Forex Weekly Outlook February 20-24

Click to enlarge

This week, I am bearish on GBPUSD as long as 1.2500 holds and will be looking to sell below 1.2426 price levels for 1.2297 targets, a sustained break should open up 1.2148 in days to come. But a negative comment or perceived negative new policy from the U.S. can void this analysis as the world await Trump new tax policy.

NZDJPY

Last week, I wrote extensively on the New Zealand dollar outlook. While the economy remains strong and well-supported by the surging commodity prices, traders seem to be selling the pair after Governor Graeme Wheeler statement on the danger of high foreign exchange to the economy.

Forex Weekly Outlook February 20-24

Click to enlarge

The pair called the top at 83.79 price levels, its 8-month high, and dropped 280 pips to close at 81.07 price levels. One of the reasons this is a good sell is the renewed interest in the Japanese yen as investors scramble for safe-haven assets ahead of numerous changes that will be taking place across the Group 8 nations. Again, I don’t think the pair is attractive enough to top its 8-month high after RBNZ statement. Hence, I am bearish on this pair this week and will be looking to sell below 81.02 support for 78.83 targets, a sustained break should boost its attractiveness for 76.23 targets 2.

Last Week Recap

NZDUSD closed below the channel last week but failed to meet our target of 0.6989. However, I remain bearish on NZDUSD this week, one, for the reasons stated above, and two, the continuous gain of the US dollar should aid NZDUSD bearish move below 0.7124 support levels, that also serves as 20-days moving average.

Forex Weekly Outlook February 20-24

Click to enlarge

Is the CEO and Founder of Investors King Limited. He is a seasoned foreign exchange research analyst and a published author on Yahoo Finance, Business Insider, Nasdaq, Entrepreneur.com, Investorplace, and other prominent platforms. With over two decades of experience in global financial markets, Olukoya is well-recognized in the industry.

Continue Reading
Comments

Naira

Naira Falls Across Multiple FX Windows as Trump Emergence Boost Dollar Value

Published

on

Naira Exchange Rates - Investors King

The Naira weakened to N1,681 per Dollar on Wednesday, November 6 in the official foreign exchange market, the Nigerian Autonomous Foreign Exchange Market (NAFEX) as the American Dollar strengthened in the global market following the emergence of Donald Trump as the US president.

The local currency fell by N10.33 or 0.61 percent to close at N1,681.65/$1 compared with Tuesday’s closing rate of N1,671.32/$1.

The daily supply of FX as measured by secondary data from FMDQ Securities Exchange Limited indicated that turnover slumped by $21.99 million or 10.1 percent to $196.78 million from $218.77 million.

The decline in supply comes as the Central Bank of Nigeria (CBN) limited the sale of forex in order to regulate cash sales in the FX market to ensure stability and compliance.

Also, the emergence of Donald Trump as the next US president made the Dollar stronger and weakened a host of other currencies, like the Naira.

The market will be looking forward to Trump’s potential policies and what it would mean for the global economy.

However, the Naira weakened in its value against the Pound Sterling in the official market by N8.74 to sell at N2,169.37/£1 compared with the preceding session’s N2,160.63/£1.

It closed flat against the Euro in the midweek to trade at the rate of N1,819.86/€1.

The local currency also weakened across the Dollar, Pound Sterling, and the Canadian Dollar in the black market.

The Naira lost N7.38 against the greenback to close at N1,715.73 to the US Dollar compared to N1,708.35/$1 it closed on Tuesday.

The Naira lost N3.33 to sell at N2,219.79/£1 compared with the preceding session’s N2,216.46/£1 and against the Canadian Dollar as it depreciated further by N6.61 to close at N1,231.23 per Canadian Dollar, compared to Tuesday’s N1,224.62 per CAD.

However, it followed a different pattern against the Euro as it appreciated N4.48 to quote at N1,860.09/€1 versus the previous day’s rate of N1,864.57/€1 and it extended losses

Continue Reading

Forex

Iran’s Currency Plummets to Historic Low Amid Trump’s Return to the White House

Published

on

Iran’s currency fell on Wednesday to an all-time low as Donald Trump clinched the U.S. presidency again, signaling new challenges ahead for Tehran as it remains locked in the wars raging in the Middle East.

The rial traded at 703,000 rials to the dollar, traders in Tehran said. The rate could still change throughout the day. Iran’s Central Bank could flood the market with more hard currencies as an attempt to improve the rate, as it has done in the past.

The slide comes as the rial already faces considerable woes over its sharp slide in value — and as the mood on the streets of Tehran among some darkened.

“One-hundred percent he will intensify the sanctions,” said Amir Aghaeian, a 22-year-old student. “Things that are not in our favor will be worse. Our economy and social situation will surely get worse.”

He added: “I feel the country is going to blow up.”

In 2015, at the time of Iran’s nuclear deal with world powers, the rial was at 32,000 to $1. On July 30, the day that Iran’s reformist President Masoud Pezeshkian was sworn in and started his term, the rate was 584,000 to $1.

Trump unilaterally withdrew America from the accord in 2018, sparking years of tensions between the countries that persist today.

Iran’s economy has struggled for years under crippling international sanctions over its rapidly advancing nuclear program, which now enriches uranium at near weapons-grade levels.

Pezeshkian, elected after a helicopter crash killed hard-line President Ebrahim Raisi in May, came to power on a promise to reach a deal to ease Western sanctions.

Iran downplays US election impact amid tensions

However, Iran’s government has for weeks been trying to downplay the effect on Tehran of whoever won Tuesday’s election in the United States. That stance continued on Wednesday with a brief comment from Fatemeh Mohajerani, a spokeswoman for Pezeshkian’s administration.

”The election of the U.S. president doesn’t have anything specifically to do with us,” she said. “The major policies of America and the Islamic Republic are fixed, and they won’t heavily change by people replacing others. We have already made necessary preparations in advance.”

By midday Wednesday in the Middle East, Donald Trump was elected the 47th president of the United States in a remarkable political comeback.

Tensions still remain high between the nations, 45 years after the 1979 U.S. Embassy takeover and 444-day hostage crisis that followed.

Iran remains locked in the Mideast wars roiling the region, with its allies battered — militant groups and fighters of its self-described “Axis of Resistance,” including the militant Palestinian Hamas, lebanon’s Hezbollah and Yemen’s Houthi rebels.

Israel is pressing its war in the Gaza Strip targeting Hamas and its invasion of Lebanon amid devastating attacks against Hezbollah. At the same time, Iran still appears to be assessing damage from Israel’s strikes on the Islamic Republic on Oct. 26 in response to two Iranian ballistic missile attacks.

Iran has threatened to retaliate against Israel — where U.S. troops now man a missile defense battery.

Mahmoud Parvari, a 71-year-old taxi driver in Tehran, did not mince his words when discussing Trump.

“I feel like I’m seeing the devil,” he said. “He looks like Satan, his eyes are like Satan and his behavior is like a mad man.”

But another taxi driver, who only gave his last name as Hosseini, offered a more pragmatic view.

“If it helps my country I would definitely” make a deal with Trump, he said. “It doesn’t matter if it’s Trump or anyone else. After all he is a human being.”

Continue Reading

Naira

Naira Rises on Dollar at NAFEM, Black Market as American Currency Weakens Globally

Published

on

NAIRA - Investors King

The Naira rose at the official market, the Nigerian Autonomous Foreign Exchange Market (NAFEM) as well as at the unofficial parallel market on Tuesday, giving a lifeline to the local currency which latched on to a weaker US Dollar in the global market.

The local currency gained 0.33 percent on the US Dollar at the official market to exchange at N1,671.32 /$1 on Tuesday, November 5 amid an improvement in supply at the official market.

The local currency rose on the American currency by N5.58 versus N1,676.90/$1 which it closed at the previous session on Monday.

Data showed a jump in supply as the turnover published on the FMDQ Group website stood at $218.77 million. This indicated that the session’s turnover fell by 175.3 percent, indicating an appreciation of $139.30 million compared to the $79.47 million published in the last trading session.

In the black market, the Naira added 52 Kobo against the greenback to close at N1,708.35 to the US Dollar compared to N1,708.87/$1 it closed on Monday.

Traders had adjusted their position, leading to a weaker position for the Dollar as voters went to the polls to choose the 47th president of the US.

There was a flat outcome for the Naira against the Pound Sterling but it depreciated against the Euro in the official market. The domestic currency closed on the British currency at N2,160.63/£1.

Meanwhile, against the Euro, the Nigerian currency closed at N1,819.86/€1 versus N1,816.40/€1, indicating an N3.46 depreciation.

The Naira gained against the British currency in the black market as it added by 93 Kobo to sell at N2,216.46/£1 compared with the preceding session’s N2,217.39/£1.

However, it followed a different pattern against the Euro as it depreciated N1.65 to quote at N1,864.57/€1 versus the previous day’s rate of N1,862.98/€1 and it extended losses against the Canadian Dollar as it depreciated further by N2.29 to close at N1,224.62 per Canadian Dollar, compared to Monday’s N1,222.33 per CAD.

Continue Reading

Trending