Forex

Forex Weekly Outlook March 13-17

Published

7 years ago

March 12, 2017

Forex Weekly Outlook March 13-17

If there is anything the US economic data confirmed last week, it was the Federal Reserve’s rate decision and the solid labour market. The economy added 235,000 jobs in February, following a 238,000 job in January. Making it the best back-to-back gain since July 2016.

The unemployment rate also improved to 4.7 percent from 4.8 percent recorded in January, indicating additional improvement in the participation rate which increased from 62.9 percent to 63 percent.

However, the wage growth was below the 0.3 percent projected by most economists, rising just 0.2 percent in February after January year-on-year wage growth was revised down from 2.9 percent to 2.8 percent. This further validated the Fed’s concerns regarding sustainability once the interest rate is increased. Therefore, clouding the potential of the U.S assets amid series of uncertainty emanating from the country.

Also, on a critical look into the report, about 26,000 jobs were lost in the retail sector of the economy in the same month. Meaning, the retail sector that formed the bulk of the services sector that constituted 70 percent of the entire American economy is not creating jobs, as retail owners are reportedly worried about the impact of the proposed border tax on their imports and subsequently profit margin. Therefore, if the Federal Reserve raise rate this week, the subsequent increase would depend on how well fiscal stimulus complement monetary adjustment in terms of job creation, wage growth and productivity. Putting the likelihood of the third rate hike this year in question.

In Euro-Area, the economy rose 0.4 percent in the final quarter of 2016. Boosting investors’ confidence to its highest level post-recession but with both household consumption and government spending surging 0.2 percent and 0.1 percent respectively, the ECB was forced to raise its growth forecast to 1.8 percent in 2017 and 1.7 percent in 2018.

Although, the European Central Bank president Mario Draghi has attributed the renewed confidence and growth in the region to surging commodity prices and argued that the underlying fundamentals remain weak. Economic experts believed the improvement in global economic outlook is aiding the region, but that the weak wages and rising inflation remain a concern.

In Canada, the economy added another 15,300 jobs in February, bringing the total jobs created in the past 12 months to 288,100 and unemployment rate to 6.6 percent from 6.8 percent.

Canadian strong job market has been supporting household spending, though there are worries around the quality of those jobs. The Bank of Canada has highlighted “subdued” wage growth and hours worked as evidence of continued lack in the country’s labor market, even with recent job gains.

Overall, the global economy is stronger in the first quarter of 2017 than what was obtained last year. But the uproar in the euro-area political sphere and uncertainty in the US continued to cast a shadow on both the financial markets and global economy.

This week NZDCAD, EURJPY, EURNZD and NZDJPY top my list.

NZDCAD

This pair has lost around 608 pips since peaking at 0.9923 price levels in November 2016. Confirming the renewed interest in the Canadian dollar after OPEC reached consensus and a more favourable bilateral trade deal with the US following a series of positive comments from Donald Trump since winning the US election.

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Also, the last 5-week candlesticks don’t just attests to downside pressure but correlate with the underlying fundamentals of the paired currencies and validated by the gravestone doji established two weeks ago. This week, I am bearish on this pair and will be looking to sell below 0.9298 for 0.9108 targets.

Last Week Cap

EURJPY

Since I mentioned this pair last week, it has gained 137 pips but still below our target of 124.18. Nevertheless, I expect the growing odds of the Fed raising rates and the eventual rates increase to impact the attractiveness of the Japanese yen and further aid this pair.

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Also, given continued growth and renewed confidence in the euro-area I remained bullish on this pair while monitoring both Netherland-Turkish and France political uprising.

EURNZD

This pair has gained about 322 pips since I mentioned it last week but was 63 pips short of our target (1.5469). While I remained bullish on this pair this week, it is advisable to adjust stop lost to lock-in part of the profit realized last week while leaving moderate room for price movement.

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NZDJPY

For the past three weeks, I have been mentioning this pair and its sell opportunities. Even though it was slower the other pairs but it was consistent and has given us 214 pips in total. However, last week it was 5 pips short of our first target at 78.83. This week, I remained bearish on this pair and will look to add to my position below 78.83 support levels.

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Samed Olukoya

Is the CEO/Founder of Investors King Limited. A proven foreign exchange research analyst and a published author on Yahoo Finance, Businessinsider, Nasdaq, Entrepreneur.com, Investorplace, and many more. He has over two decades of experience in global financial markets.

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Naira

Naira’s Upsurge Strains Nigeria’s Foreign-Exchange Reserves

Published

8 hours ago

April 17, 2024

Samed Olukoya

As the Nigerian Naira continued to rebound from its record low against its global counterparts, the nation’s foreign exchange reserves has been on the decline, according to the data published by the Central Bank of Nigeria (CBN) on its website.

CBN data showed liquid reserves have plummeted by 5.6% since March 18 to $31.7 billion as of April 12, the largest decline recorded over a similar period since April 2020.

The recent surge in the Naira follows a series of measures implemented by the Central Bank to liberalize the currency market and allow for a more flexible exchange rate system.

These measures included devaluing the Naira by 43% in January and implementing strategies to attract capital inflows while clearing the backlog of pent-up dollar demand.

Charles Robertson, the head of macro strategy at FIM Partners, acknowledged the Central Bank’s efforts to restore the Naira to a realistic exchange rate, suggesting that it aims to stimulate investment in the local currency and enhance liquidity in the foreign exchange market.

Despite the rapid depletion of foreign-exchange reserves, Nigeria still maintains a significant cushion, bolstered by a rally in oil prices and inflows from multilateral loans.

Gross reserves of approximately $32.6 billion provide coverage for about six months’ worth of imports, according to the International Monetary Fund.

The Central Bank’s disclosure last month that it had cleared a backlog of overdue dollar purchase agreements, estimated at $7 billion since the beginning of the year, indicates progress in addressing longstanding currency challenges.

However, uncertainties remain regarding the extent of dollar debt retained by the Central Bank as revealed by its financial statements late last year.

Furthermore, the decline in foreign-exchange reserves persists despite a surge in inflows into Nigeria’s capital markets, driven by interest rate hikes and increased attractiveness of local debt.

Foreign portfolio inflows exceeded $1 billion in February alone, contributing to a total of at least $2.3 billion received so far this year, according to central bank data.

Analysts remain cautiously optimistic about the trajectory of Nigeria’s foreign-exchange reserves, anticipating stabilization or potential growth fueled by anticipated inflows from Afreximbank, the World Bank, and potential eurobond issuance.

Also, the resurgence of oil prices and the expected return of remittances through official channels offer prospects for replenishing reserves in the near future.

Naira

Dollar to Naira Black Market Today, April 17th, 2024

As of April 17th, 2024, the exchange rate for the US dollar to the Nigerian Naira stands at 1 USD to 1,50 NGN in the black market, also referred to as the parallel market or Aboki fx.

Published

10 hours ago

April 17, 2024

Samed Olukoya

As of April 17th, 2024, the exchange rate for the US dollar to the Nigerian Naira stands at 1 USD to 1,50 NGN in the black market, also referred to as the parallel market or Aboki fx.

For those engaging in currency transactions in the Lagos Parallel Market (Black Market), buyers purchase a dollar for N1,70 and sell it at N1,060 on Tuesday, April 16th, 2024 based on information from Bureau De Change (BDC).

Meaning, the Naira exchange rate improved when compared to today’s rate below.

This black market rate signifies the value at which individuals can trade their dollars for Naira outside the official or regulated exchange channels.

Investors and participants closely monitor these parallel market rates for a more immediate reflection of currency dynamics.

How Much is Dollar to Naira Today in the Black Market?

Kindly be aware that the Central Bank of Nigeria (CBN) does not acknowledge the existence of the parallel market, commonly referred to as the black market.

The CBN has advised individuals seeking to participate in Forex transactions to utilize official banking channels.

Black Market Dollar to Naira Exchange Rate

Buying Rate: N1,050
Selling Rate: N1,040

Naira

Naira Appreciates to N1,136/$ Officially, N1,050/$ Parallel Market

Published

1 day ago

April 16, 2024

Samed Olukoya

The Nigerian Naira appreciated to N1,136 against the United States Dollar at the official market and rose to N1,050 at the parallel market.

At the official foreign exchange market, data from the FMDQ Exchange revealed that the Naira strengthened by 6.1 percent or N69 from its previous rate of N1,205/$ recorded on Friday to N1,136/$ on Monday.

This surge underscores the effectiveness of recent foreign exchange directives implemented by the Central Bank of Nigeria (CBN), aimed at stabilizing the Naira and bolstering liquidity in the market.

At the parallel market, the Naira appreciated to N1,050 against the Dollar, reflecting an improvement in the currency’s value in informal trading circles.

This resurgence has brought renewed hope to traders and businesses operating in the informal sector, as they anticipate further strengthening of the Naira in the coming days.

The improved exchange rate follows a series of strategic interventions by the CBN to address foreign exchange challenges and stabilize the Naira.

The positive momentum in the forex market has been further reinforced by a surge in total inflows into the Nigerian Autonomous Foreign Exchange Market (NAFEM), which increased by 41.7 percent to $3.75 billion in March, compared to $2.64 billion in February.

Commenting on the recent developments, analysts at Afrinvest expressed optimism about the continued strengthening of the Naira, attributing it to the CBN’s intensified efforts to bolster liquidity in the market.

They anticipate further improvements in the exchange rate as the apex bank maintains its proactive stance on forex management.