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Forex Weekly Outlook March 27 – 31

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US Dollar - Investorsking.com
  • Forex Weekly Outlook March 27 – 31

The US dollar slid to its lowest in 4 months on Wednesday following Donald Trump failed health care bill that has raised questions about his administration’s ability to push its pro-growth agenda through congress. This uncertainty has rendered the US dollar unattractive and led to massive sales of the currency across the board, as investors are beginning to doubt the feasibility of Trump’s proposed tax cut and increase job creation.

In the U.k, inflation rose more than forecast in February to 2.3 percent, the highest since 2013. While, investors are waiting for Theresa May to officially trigger article 50 of Lisbon treaty on March 29, experts are projecting the slowdown in consumer spending to further decline to about 2 percent this year from 3 percent recorded in 2016.

Also, inflation in the region is expected to reach a new height as uncertainty surrounding the U.K economic outlook ahead of Brexit continues to weigh on new job creation, business sentiment, costs of import goods and profits of companies that generate the bulk of their revenues from overseas.

Overall, the US dollar has given back almost all it gained through popular ‘Trump Rally’ after last week failed health care bill. However, the US economy remained strong and projected to meet and sustained 2 percent inflation target going forward. But the uncertainty surrounding economic policy remains.

Likewise, the Euro-area economy has revamped strongly following the surge in global commodity prices. Therefore, I expect the euro single currency to dip during the official Brexit process but not as much as the British pound.

This week, CADJPY and NZDPY

CADJPY

This pair plunged 133 pips to meet our last week’s target 1 at 83.11 support levels. However, due to the increased uncertainty regarding OPEC 2nd production cut amid the surge in the US shale production. I am expecting a break below 83.11 support to increase the attractiveness of this pair and open up 80.27 support levels (2nd target). This is partly because the Canadian dollar is crude oil driven and of recent has started reacting to US positive policy owning to the trade relationship between the two nations.

Forex Weekly Outlook March 27 – 31

Also, the Japanese yen is likely to continue its gain this week, especially with Theresa May officially triggering article 50 on Wednesday and the US uncertainty reaching a new peak after failed health care bill. Therefore, I remain bearish on this pair with 80.27 as the target.

NZDJPY

Since I first mentioned this pair sell potential in February. It has given us about 283 pips and closed below our first target of 78.83 last week. However, I am projecting continued gain of the Japanese yen as investors and businesses scramble to avert possible volatility following official Brexit initiation on Wednesday, hence, leading to a surge in demand for haven assets. So this week I remain bearish on this pair with 76.23 as the target as stated in the February analysis.

Forex Weekly Outlook March 27 – 31

Last Week Recap

GBPJPY

This pair has plunged 153 pips since last week but yet to hit our first target as stated in the last analysis.

Forex Weekly Outlook March 27 – 31

This week, I remain bearish ahead of Brexit and all the uncertainty attached to it. I will be looking to add to my sell position below 134.90 support levels.

EURNZD

A sustained break of 1.5469 is needed to validate bullish continuity as stated last week.

Forex Weekly Outlook March 27 – 31

However, because of the uncertainty surrounding Brexit and the entire euro-area this week. I will be standing aside once our first target is met at 1.5469.

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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