Forex

Dollar Drops as Euro Bearish Bets Erase Trump-Fueled Rally

Published

8 years ago

March 13, 2017

Dollar Drops as Euro Bearish Bets Erase Trump-Fueled Rally

The dollar traded lower versus most of its Group-of-10 peers on position unwinding after the latest U.S. employment report, while the euro attempted to maintain bullish momentum fueled by a more hawkish-than-expected European Central Bank.

The Bloomberg Dollar Spot Index pared some its losses as traders across Europe noted some intra-day accounts fading the latest dip. The early drop picked up its tone from last week’s close as investors assessed that market pricing reflected three hikes by the Federal Reserve this year and left dollar-bulls looking for signs from this week’s meeting that four hikes may be a serious option for policy makers.

The euro’s outlook remains constructive even as it failed to sustain gains seen early in the day. The change in the ECB’s tone, together with its consideration to increase interest rates before the completion of its bond-buying program, have wrong footed the market. Investors have been closing euro shorts versus the dollar, the Swiss franc and the yen, sending the common currency higher. Yet the move’s steepness, with the Euro Bloomberg Index rising by the most in three months, has seen some range-seeking sellers, traders in Europe noted.

Spot action aside, euro sentiment has become less bearish in the options market as well. Risk reversals on the one-year tenor, which largely overlooks noise from political risks across the currency bloc, show that bearish bets have reversed their course since the U.S. elections in November. They still remain in favor of dollar calls as interest rate differentials matter. On the front-end, bets are close to turning euro-bullish for the first time in four months.

For now, EUR/USD may remain within 1.0645-1.0700 range as a total of EU4.8b worth of expiries roll over Monday
- The pair has shifted to a buy-the-dips approach with large demand seen at 1.0620-40 and circa 1.0600: traders
- Leveraged demand for euro is also seen in the crosses, with order books skewed toward further buying
- EUR/USD hit a fresh one-month high at 1.0714, and dropped near 1.0668, its open level for the day, after short-term names sold into the rally
EUR/CHF managed to rise above 1.0800 handle for the first time in three months as investors closed shorts, in spot and options markets alike
- Shift in ECB tone has eased concerns over a possible move toward the lower band of the SNB’s unofficial 1.05-1.10 corridor that prompted the franc-long positions in the first place
- This could mean a lower need for interventions by the central bank that convenes Thursday; no rate change is expected while no press conference is scheduled
The pound traded higher versus most of its G-10 peers; cable managed to gain as much as 0.6% on the back of model accounts supporting it, after the pair managed to hold support from its post-October flash crash trendline
- Interbank names look to fade any further pound strength amid May’s attempt to silence her fellow party rebellion as she tries to win the power to trigger Article 50. With the market split over the effect of the actual Brexit trigger on the pound, risk reward is seen by some investors in offering rallies in pound crosses: traders
Aussie outperforms, gains versus all G-10 peers; it tests the 38.2% Fibonacci retracement of its drop since Feb. 23; leveraged demand in AUD/NZD also boosts the currency
Yen higher a second day; support from the dollar comes from nearby 55-DMA at 114.27
Expiries Monday in kiwi at 0.6950 (NZ$353m) and 0.7000 (NZ$371m) may anchor price action: DTCC
Some information comes from FX traders familiar with the transactions who asked not to be identified because they are not authorized to speak publicly

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Samed Olukoya

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.

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Naira

Naira Drops 0.04% to N1,659.69/$1 at Official FX Market, Dips at Parallel Market

Published

17 hours ago

October 17, 2024

Iyanuoluwa Martins

The Naira fell to N1,659 per Dollar on Wednesday in the official foreign exchange market, the Nigerian Autonomous Foreign Exchange Market (NAFEX).

The local currency fell by 72 Kobo or 0.04 percent to close at N1,659.69/$1 compared with Tuesday’s closing rate of N1,658.97/$1.

The market continued to weigh the recent inflation rise after the National Bureau of Statistics (NBS) on Tuesday said Nigeria’s inflation rose to 32.70 percent in the month of September, the first time after moderating in July and August.

Analysts from the World Bank ranked Nigerian Naira as among the worst-performing currencies in sub-Sahara Africa in 2024, noting that the local currency has lost about 43 percent.

The World Bank, in its latest edition of Africa’s Pulse report, disclosed that the Naira is at the same level with the Ethiopian Birr, and South Sudanese Pound in terms of decline in the region.

The report disclosed that the continued increase in the demand for Dollars and limited Dollar inflow is responsible for Naira depreciation in the last months.

The daily supply of FX as measured by secondary data from FMDQ Securities Exchange Limited indicated that turnover slumped by $40.85 million or 18.7 percent to $177.01 million from $217.86 million.

The Naira weakened its value against the Pound Sterling in the official market by N64.28 to sell at N2,153.90/£1 compared with the preceding session’s N2,089.62/£1.

It followed the same route against the Euro as it depreciated N51.67 to quote the midweek session at N1,800.79/€1 versus the preceding rate of N1,749.12/€1.

In the Parallel market, the Naira weakened on the American currency as it closed at N1,693.32 to the US Dollar, a drop of N29.61 compared to N1,663.71/$1 it closed during the Wednesday trading session.

The Naira also dropped in its value against the British Pound Sterling in the official market by N38.17 to sell at N2,159.12/£1 compared with the preceding session’s N2,120.95/£1 and followed the same pattern against the Euro as it depreciated N31.51 to quote at N1,847.94/€1 versus the previous day’s rate of N1,816.43/€1.

The local currency also depreciated N7.07 to close at N1,204.66 per Canadian Dollar, compared to Tuesday’s N1,197.59 per CAD.

Naira

World Bank Lists Naira Among Africa’s Worst Performing Currencies

Published

1 day ago

October 16, 2024

Ugwoke Ogbodo

The World Bank has ranked Nigerian Naira as among the worst-performing currencies in sub-Sahara Africa in 2024.

The World Bank, in its latest edition of Africa’s Pulse report, disclosed that the Naira is at the same level with the Ethiopian Birr, and South Sudanese Pound in terms of decline in the region.

The report disclosed that the continued increase in the demand for dollars and limited dollar inflow is responsible for Naira depreciation in the last months.

According to the report, as of August, the Naira lost about 43 percent.

It added that by August 2024, the Ethiopian birr, Nigerian naira, and South Sudanese pound were among the worst performers in the region.

According to the report, the Nigerian naira continued losing value, with a year-to-date depreciation of about 43 percent as of end-August.

It stated that the increase in demand for US dollars in the parallel market, driven by financial institutions, money managers, and non-financial end-users, combined with limited dollar inflows and slow foreign exchange disbursements to currency exchange bureaus by the central bank explain the weakening of the naira.

The Naira plummeted to a new record low, closing at N1,700 per dollar in the parallel market on October 14, 2024, according to data from Bureau de Change (BDC) operators.

This represents a 0.29% drop from its previous rate of N1,695/$1 recorded on October 11, despite a surge in crude oil prices, which have surpassed $80 per barrel.

Naira

Naira Falls to N1,658.97/$1 at Official Market, Gains at Black Market

Published

2 days ago

October 16, 2024

Iyanuoluwa Martins

The Naira weakened to N1,658.97 per Dollar on Tuesday, October 15 at the Nigerian Autonomous Foreign Exchange Market (NAFEX) as the local currency fell by N106.05 or 6.8 percent to close at N1,658.97/$1 compared with Monday’s closing rate of N1,552.92/$1.

The daily supply of FX as measured by secondary data from FMDQ Securities Exchange Limited indicated that turnover slumped by $125.85 million or 36.6 percent to $217.86 million from $343.71 million.

The fall in the local currency came as the National Bureau of Statistics (NBS) released the headline inflation rate for September 2024 which showed that the Consumer Price Index rose to 32.70 percent.

This represents an increase of 0.55 percent from the August 2024 figure of 32.15 percent, after inflation dropped consecutively in the previous two months of July and August.

“In September 2024, the Headline inflation rate was 32.70% relative to the August 2024 headline inflation rate of 32.15%. Looking at the movement, the September 2024 Headline inflation rate showed an increase of 0.55% compared to the August 2024 Headline inflation rate.

“On a year-on-year basis, the Headline inflation rate was 5.98% points higher compared to the rate recorded in September 2023 (26.72%). This shows that the Headline inflation rate (year-onyear basis) increased in September 2024 when compared to the year-on-year in the preceding year (i.e., September 2023).

“Furthermore, on a month-on-month basis, the Headline inflation rate in September 2024 was 2.52%, which was 0.30% higher than the rate recorded in August 2024 (2.22%). This means that in September 2024, the rate of increase in the average price level is higher than the rate of increase in the average price level in August 2024,” the NBS report said.

Meanwhile it was a different outcome in the Parallel market, the Naira gained on the American currency as it closed at N1,663.71 to the US Dollar, a rise of N9.84 compared to N1,673.55/$1 it closed during the Wednesday trading session.

The Naira strengthened its value against the Pound Sterling in the official market by N16.41 to sell at N2,120.95/£1 compared with the preceding session’s N2,137.36/£1 and followed the same pattern against the Euro as it appreciated N13.39 to quote at N1,816.43/€1 versus the previous day’s rate of N1,829.82/€1.

The local currency also appreciated N4.07 to close at N1.197.59 per Canadian Dollar, compared to Monday’s N1,201.66 per CAD.