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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.

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

Nigeria Hits Historic High as Currency in Circulation Surges to N3.69 Trillion

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naira

Nigeria’s currency in circulation surged to a historic high of N3.69 trillion, according to data released by the Central Bank of Nigeria (CBN).

This figure represents an increase of N43.07 billion or 1.18 percent from the total of N3.65 trillion reported in January 2024 and a 13.64 percent year-on-year rise from N3.25 trillion reported in February 2023.

Currency in circulation encompasses the physical cash, including paper notes and coins, actively used in transactions between consumers and businesses within the country.

The latest statistics indicate a considerable uptick in the availability of cash within the Nigerian economy.

The surge in currency supply comes amidst lingering concerns over a potential cash crunch following the monetary policy adjustments by the CBN, particularly the aggressive tightening stance of the Monetary Policy Committee (MPC).

Analysts attribute this spike to various factors, including the fear factor stemming from the cash crunch experienced in 2023 and lingering uncertainties surrounding the administration of physical currency.

Despite the surge in currency in circulation, Nigeria’s economic growth remains sluggish, with projections indicating growth rates of around 2.9 percent to 3.1 percent for 2024.

Also, inflation remains a significant concern, with the headline inflation rate climbing to 31.70 percent in February 2024 from 29.9 percent reported in January 2024, according to data from the National Bureau of Statistics (NBS).

The CBN’s proactive approach to monetary policy, including a historic increase in the monetary policy rate (MPR) to 24.75 percent, underscores the central bank’s commitment to addressing economic challenges and fostering stability amidst persistent pressures.

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Naira

Nigerian Naira Surges to N1,350 per Dollar in Parallel Market

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New Naira notes

The Nigerian Naira has appreciated to N1,350 per dollar in the parallel market, a significant gain from its previous rate of N1,430 per dollar just a day earlier.

Similarly, in the Nigerian Foreign Exchange Market (NAFEM), the naira strengthened to N1,382.95 per dollar, indicating an upward trend across key forex segments.

Data from FMDQ revealed that the indicative exchange rate for NAFEM fell to N1,382.95 per dollar from N1,408.04 per dollar on the previous day, representing a gain of N25.09 for the naira.

This surge in the naira’s value has widened the margin between the parallel market rate and NAFEM to N32.95 per dollar from N21.96 per dollar previously.

Analysts attribute this impressive surge to recent foreign exchange reforms implemented by the Central Bank of Nigeria (CBN).

These reforms, including the consolidation of exchange rate windows and liberalization of the FX market, have contributed to bolstering the naira’s strength against the dollar.

The CBN’s proactive measures aim to promote stability, transparency, and liquidity in the foreign exchange market, fostering confidence among investors and strengthening the national currency.

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Forex

CBN Governor Reveals $2.4 Billion Forex Forwards Under Investigation

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Naira Exchange Rates - Investors King

Governor Yemi Cardoso of the Central Bank of Nigeria (CBN) disclosed that law enforcement agencies are currently investigating foreign exchange forwards valued at $2.4 billion.

This announcement came in the wake of the Monetary Policy Committee (MPC) meeting held in Abuja on Tuesday, March 26.

Governor Cardoso shed light on the meticulous forensic audit conducted on these transactions, which uncovered numerous discrepancies, rendering them ineligible for payment.

The CBN, while settling certain tranches of FX backlog, encountered transactions riddled with issues concerning their authenticity.

To address these concerns, Deloitte management consultants were enlisted to conduct a comprehensive forensic analysis spanning several months.

The audit revealed a multitude of irregularities, including allocations disbursed without corresponding requests, lack of proper documentation, and instances of outright illegality.

Cardoso emphasized the gravity of the situation, stating, “We refused to validate them because, apart from the fact that documentation was not satisfactory in many cases, they were outright illegal.”

He underscored the commitment of law enforcement agencies to investigate these transactions thoroughly.

Despite concerns about potential backlogs among stakeholders, Cardoso assured that the market remains open and transparent for addressing any outstanding contractual obligations.

The CBN has diligently verified and settled recognized backlogs of forward transactions.

This revelation comes at a critical juncture as Nigeria grapples with economic challenges, including inflationary pressures.

The MPC’s decision to raise the benchmark interest rate to 24.75 percent reflects efforts to stabilize prices and restore the purchasing power of the average Nigerian.

As investigations unfold and regulatory scrutiny intensifies, the CBN’s commitment to transparency and financial integrity will be closely monitored by stakeholders across the nation.

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