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Forex

Forex Weekly Outlook February 27 – March 3

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Euro currency
  •  Forex Weekly Outlook February 27 – March 3

The US dollar remained volatile even as economic data showed the labor market is strong and inflation rate is close to the Federal Reserves’ 2 percent target. Accordingly, experts have attributed last week dollar’s weakness to President Trump’s comment after saying on Thursday that the US dollar is too strong and that he will push for a weaker currency.

However, the euro-area currency is predicted to fall below parity against the US dollar this year, as central bank policies continue to differ.

Business confidence in the region has plunged in recent weeks amid lower than the expected growth rate, while Greece’s financial crisis once again threaten to break the Union apart.

The European Central Bank is therefore expected to go on with its huge quantitative easing programme, keeping the euro weak.

The growing popularity of France’s anti-Brussels candidate Marine Le Pen and her pledge to call a Frexit referendum should she win the election could also push investors to sell-off the currency.

Overall, the US dollar remained strong but uncertainty cloud its short-term outlook, while the Euro-area is yet to resolve Greece issue and face possible Frexit as it awaits both French election and official triggering of the Brexit process in March. The single currency is expected to dip further against the US dollar as traders and investors are likely to sell off the currency ahead of France election in April.

This week, EURJPY, GBPUSD and NZDJPY top my list.

EURJPY

The Euro single currency is facing low sentiment amid the political uprising in the Euro-area. While on the other hand, the Japanese yen remained a haven asset and likely to remain attractive as investors scramble to avert uncertain in both the US and Europe.

EURJPYWeekly

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Another reason why this pair is a good sell, after this pair dropped to 109.22 record-low on 19th, June 2016. It has failed to break out of post-Brexit high (124.08) since then and seems to have established a range between 124.18 and 111.96 price levels. But with the renewed sell-off of the euro single currency, we could see this pair plunging to 115.27 support levels.

Therefore, this week I am bearish on EURJPY as long as price remains below 119.86, 20-day moving average. I will be looking to see below 118.55 for 115.27 targets, a break of that level could give us 111.96 support, target 2.

Last Week Recap

GBPUSD

Last week, GBPUSD broke loose after President Trump comments on Thursday, however, the pair has gained back almost everything it lost due to that comment. This week, I remain bearish on this pair as the Brexit condition and the Euro-area financial issues deepened ahead of March Brexit date.

GBPUSDDaily

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While the US uncertainty continued to impact dollar strength, the weakness revealed in the UK consumer spending and the cooling job market is likely to reinforce sellers’ interest ahead of official Brexit in March.

NZDJPY

This pair dropped 51 pips last week but below our projection. However, it closed below 81.02 resistance levels. This week, I remain bearish on NZDJPY and will be looking to add to my position below 79.92.

NZDJPYWeekly

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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.

Naira

Daily Naira Exchange Rates; Thursday, May 6, 2021

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Naira Exchange Rates - Investors King

Naira depreciated further at the parallel market on Thursday as the local currency traded at N485 to a United States Dollar. The Nigerian Naira exchanged at N676 to a British Pound and N585 to a Euro as shown below.

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
06/05/2021 480/485 665/676 575/585 62/69 395/405 292/320

Bureau De Change Naira Rates

Date

USD

GBP

EURO

NGN

BUY/SELL

BUY/SELL

BUY/SELL

06/05/2021

475/482

663/676

575/587

06/05/2021

475/482

663/676

575/587

Central Bank of Nigeria’s Official Naira Rates

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Forex

CBN Extends N5/$ Incentive Period to Boost Dollar Inflow

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Godwin Emefiele - Investors King

The Central Bank of Nigeria (CBN) has extended the N5 per US Dollar incentive on forex remittance indefinitely to boost liquidity and further deepen economic recovery.

The initiative was scheduled to end on May 8. It was introduced to encourage recipients of dollars to use formal banking channels and help the central bank capture such inflows to boost the stability of the local currency, which has been under pressure after oil prices plunged last year.

“We hereby announce the continuation of the scheme until further notice,” the regulator said in a statement on its website on Thursday.

The naira has been devalued three times since last year after a sharp drop in oil earnings, which accounts for 90% of foreign-exchange inflows, and remittances from workers abroad led to a dollar crunch in the West African nation, which produces the most crude in Africa. The local unit traded for 410.31 on the investors and exporters window, also called Nafex, as of 8:51 a.m. in Lagos.

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US Dollar

Dollar Falls as Risk Appetite Improves, Sterling Dips on BoE

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US Dollar - Investorsking.com

The dollar dropped to its lowest point in three days on Thursday as global market risk appetite improved, while sterling zig-zagged after the Bank of England slowed the pace of its bond-buying, but left interest rates unchanged.

Fewer Americans filed new claims for unemployment benefits last week, data showed, as COVID-19 vaccination efforts and massive amounts of government stimulus led to a further reopening of the economy.

While the U.S. economy has been gaining steam, Federal Reserve speakers on Wednesday downplayed the risks of higher inflation.

Those statements reinforced “the lower-for-longer mentality with regards to interest rates,” making the greenback less appealing, said Neil Jones, head of FX sales at Mizuho.

The safehaven U.S. dollar was last down 0.31% at 91.977 against a basket of peer currencies.

“What we’ve seen early in New York is a little bit of back-and-forth gyrations, just because of the Bank of England meeting,” said Erik Bregar, director and head of FX strategy at the Exchange Bank of Canada.

The Bank of England said it would slow the pace of its bond-buying as it sharply increased its forecast for Britain’s economic growth this year after its coronavirus slump, but it stressed it was not tightening monetary policy.

“They kept their QE target in place but they said they are going to reduce the weekly pace of purchases, but that’s not a signal and so sterling has kind of gone up and down and done nothing at the end of the day,” Bregar said.

The pound was last down 0.08% against the weaker dollar at $1.3900 .

The euro was up 0.47% versus the dollar at $1.2061 , and up 0.65% against the pound, at 86.88 pence per euro.

Investors were also paying attention to elections in Scotland that could herald a political showdown over a new independence referendum.

The Australian dollar fell sharply overnight when China said it would stop its economic dialogue with Australia, but the currency had recovered to trade close to flat on the day as European markets opened.

The Aussie was up 0.1% versus the U.S. dollar at 0.77515 at 1028 GMT, having hit as low of 0.7701 overnight.

The New Zealand dollar also dropped and was down 0.1% on the day.

“The announcements of the formal suspension of the economic dialogue between China and Australia should not have a lasting impact on markets given the already strained relationship between the two ahead of the event,” wrote ING strategists in a note to clients.

The Canadian dollar hit a three-and-a-half year high, helped by oil price gains and the Bank of Canada’s recent shift to more hawkish guidance.

In cryptocurrencies, ether traded around $3,500 after reaching a record high of $3,559.97 on Tuesday, skyrocketing nearly 800% this month.

Bitcoin declined 0.2% to $57,392.75.

The meme-based virtual currency Dogecoin soared on Wednesday to an all-time high, extending its 2021 rally to become the fourth-biggest digital coin.

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