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Forex Weekly Outlook May 8-12

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  • Forex Weekly Outlook May 8-12

The US dollar gained against currencies of emerging economies last week after data showed the US economy added more jobs than projected. The economy which added 211,000 jobs in April, improved its unemployment rate to 4.4 percent, the lowest pre-recession.

However, the wage remains slow, rising just 0.3 percent in April to 2.5 percent year-on-year. While, a senior White House Adviser, Gary Cohn, has said the administration would like to bring back manufacturing and service jobs that pay high. It is uncertain how the administration intends to slowdown consumer prices and at the same time sustain growth with unemployment already at its lowest rate since before the financial crisis.

Likewise, further fiscal boost is expected to prompt the Federal Reserve to raise borrowing cost faster than previously anticipated. If that happens, it could slow down Trump’s job creation and growth plans.

In Canada, new job creation dropped significantly in April to 3,200 from 19,400 created in March. This is far less than the 10,000 projected by economists. Also, the pace of annual wage rate increases dropped to 0.7 percent April, making it the lowest since the 1990s.

Although, the unemployment rate improved to 6.5 percent in the same month, the report showed there were about 45,500 workers that left the labor force in the same period. Half of whom were youth.

While the surge in commodity prices and business confidence in the US, Canada’s largest trading partner, has aided economic growth in Canada. The weak economic data could be a one-time thing, especially with the French-election going on. However, a positive win for Macron will further boost growing Canada’s economy as the trade pact signed with European Union a month earlier will bolster economic outlook going forward.

OPEC, last week global oil prices plunged to 5-months low following a report that hedge and money managers have started cutting their bullish positions as most analysts believe rising U.S. oil production would hinder OPEC strategy at curbing prices from reaching $45 a barrel. While, experts have said OPEC need to do more than the 1.8 million barrels a day it cut last year and extend production cut at least for another 6 months, it is uncertain if Libya and Nigeria that were previously exempted but has upped production now would be included.

Therefore, the uncertainty surrounding OPEC policy and surge in the U.S. oil production will continue to weigh on currencies of commodity-dependent economies.

In the UK, the manufacturing sector surprisingly rose more than expected in April, expanding from 54.2 in March to 57.3. According to the IHS Markit’s report, growth in new orders and exports also gathered space, however, there were concerns that rising inflation rate and the surge in the cost of imported goods would impact retail sales and job creation in the sector.

Overall, the US dollar remains strong, while the French election has offered a new support line for the Euro single currency—especially after Brexit. However, drop in commodity prices continue to weigh on emerging currencies and expected to continue until OPEC reach an accord to moderate price.

This week, I will be looking at USDJPY and NZDCAD pairs.

USDJPY

After the Bank of Japan lowered its inflation forecast last month. The Japanese yen dipped against the US dollar, losing over 300 pips. But with the U.S. labour market adding more jobs than projected and the Trump tax policy expected to increase consumer prices faster than anticipated, the Federal Reserve will likely raise rates soon. Hence, the reason the U.S. dollar is rising against the yen.

Forex Weekly Outlook May 8-12

Technically, this pair closed as a bullish pin bar last week. Suggesting that the pair may cross the 113 resistance levels, above the descending channel. While, further bullish run of this pair depends on market’s perception of the U.S. economic policy. A sustained gain above the channel will open up 114.43 targets.

However, failure to sustainably break 113 resistance levels, would attract sellers below the channel and open up the 111.81 support levels, then 110.13 support.

NZDCAD

First, currencies of emerging economies are affected by the drop in prices of global commodities and positive US economic data. Second, the Canadian economy of late has started reacting to US economy and seems to be directly proportional relationship wise. Therefore, with the US economy boosted by positive economy data and possibility of the Fed raising rate three times this year, the Canada’s manufacturing sector remains viable.

NZDCADWeekly

Last month, I mentioned this pair sell potential. But after the US labour market (NFP) disappointed in March the pair rebounded before closing as a bearish pin bar last week. This week, I will be looking to sell this pair below 0.9382 support levels with 0.9298 support as the first target, I will expect a sustained break to open up 0.9108 as explained last month.

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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Forex

Zimbabwe Mandates Partial Tax Payments in New Bullion-Backed Currency

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In a strategic move to reinforce its new bullion-backed currency, Zimbabwe will require businesses to pay a portion of their taxes in Zimbabwe Gold (ZiG), Finance Minister Mthuli Ncube announced on Wednesday.

The regulations, aimed at enhancing the stability and acceptance of the ZiG, are part of broader efforts to strengthen the nation’s fiscal and monetary framework.

“The Treasury is stepping up to complement the fiscal and monetary policy framework aimed at further anchoring the currency, exchange rate, and price stability,” Ncube stated in an emailed announcement.

Since 2020, Zimbabwe has allowed taxes to be settled in the currency businesses predominantly use. However, under the new system, specific ratios will dictate the portions of taxes that must be paid in ZiG and other foreign currencies, alongside those that can solely be settled in the new unit.

The ZiG, introduced on April 5, 2024, replaced the Zimbabwean dollar, which had depreciated by 80% against the US dollar in the official market earlier this year.

Backed by 2.5 tons of gold and $100 million in foreign currency reserves held by the central bank, the ZiG is part of Zimbabwe’s broader strategy to avoid the pitfalls that led to the collapse of its previous six currencies.

“The changes will add to a raft of measures aimed at ensuring the ZiG doesn’t suffer the fate of its predecessors,” Ncube stated.

The finance minister highlighted that the new tax policy is designed to foster greater stability in the ZiG’s value and ensure it becomes a cornerstone of Zimbabwe’s economy. The government hopes that by requiring businesses to transact in ZiG, it will boost demand for the currency, thereby strengthening its position in the market.

Additional measures to bolster the ZiG include urging miners to increase gold production and extending the currency crackdown to include more stringent regulations on companies. These efforts are geared toward ensuring a steady influx of gold to back the currency, thus reinforcing its value and credibility.

Economists have noted that the success of the ZiG will depend heavily on these regulatory measures and the government’s ability to maintain a stable economic environment. The ZiG’s introduction has already shown a “positive impact” on the economy, but sustained confidence in the currency will be crucial.

“Zimbabwe’s new tax policy is a bold step towards economic stability,” said John Mangudya, Governor of the Reserve Bank of Zimbabwe. “By ensuring that a portion of taxes are paid in ZiG, we are creating a consistent demand for the currency, which will help maintain its value and prevent the hyperinflation that plagued our previous currencies.”

The move has received a mixed reaction from the business community. While some see it as a necessary step towards stabilizing the economy, others are concerned about the immediate impact on cash flow and the complexities of adapting to the new system.

“We understand the government’s need to stabilize the currency,” said Takura Mugaga, CEO of the Zimbabwe National Chamber of Commerce. “However, we urge the authorities to consider the implementation challenges businesses might face and provide adequate support during the transition period.”

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Naira

Black Market Dollar to Naira Exchange Rate Today 18th June 2024

The black market, also known as the parallel market or Aboki fx, US dollar to Nigerian Naira exchange rate as of June 18th, 2024 stood at 1 USD to ₦1,480.

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New Naira notes

The black market, also known as the parallel market or Aboki fx, US dollar to Nigerian Naira exchange rate as of June 18th, 2024 stood at 1 USD to ₦1,480.

Recent data from Bureau De Change (BDC) reveals that buyers in the Lagos Parallel Market purchased a dollar for ₦1,510 and sold it at ₦1,500 on Monday, June 17th, 2024.

This indicates an improvement in the Naira exchange rate value when compared to today’s rate.

The black market rate plays a crucial role for investors and participants, offering a real-time reflection of currency dynamics outside official or regulated exchange channels.

Monitoring these rates provides insights into the immediate value of the Naira against the dollar, guiding decision-making processes for individuals and businesses alike.

It’s important to note that while the black market offers valuable insights, the Central Bank of Nigeria (CBN) does not officially recognize its existence.

The CBN advises individuals engaging in forex transactions to utilize official banking channels, emphasizing the importance of compliance with regulatory frameworks.

How much is dollar to naira today in the black market

For those navigating the currency exchange landscape, here are the latest figures for the black market exchange rate:

  • Buying Rate: ₦1,480
  • Selling Rate: ₦1,470

As economic conditions continue to evolve, staying informed about currency exchange rates empowers individuals to make informed financial decisions. While the black market provides immediate insights, adherence to regulatory guidelines ensures stability and transparency in forex transactions.

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Naira

Black Market Dollar to Naira Exchange Rate Today 17th June 2024

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on

New Naira notes

The black market, also known as the parallel market or Aboki fx, US dollar to Nigerian Naira exchange rate as of June 17th, 2024 stood at 1 USD to ₦1,510.

Recent data from Bureau De Change (BDC) reveals that buyers in the Lagos Parallel Market purchased a dollar for ₦1,490 and sold it at ₦1,480 on Thursday, June 13th, 2024.

This indicates a decline in the Naira exchange rate value when compared to today’s rate.

The black market rate plays a crucial role for investors and participants, offering a real-time reflection of currency dynamics outside official or regulated exchange channels.

Monitoring these rates provides insights into the immediate value of the Naira against the dollar, guiding decision-making processes for individuals and businesses alike.

It’s important to note that while the black market offers valuable insights, the Central Bank of Nigeria (CBN) does not officially recognize its existence.

The CBN advises individuals engaging in forex transactions to utilize official banking channels, emphasizing the importance of compliance with regulatory frameworks.

How much is dollar to naira today in the black market

For those navigating the currency exchange landscape, here are the latest figures for the black market exchange rate:

  • Buying Rate: ₦1,510
  • Selling Rate: ₦1,500

As economic conditions continue to evolve, staying informed about currency exchange rates empowers individuals to make informed financial decisions. While the black market provides immediate insights, adherence to regulatory guidelines ensures stability and transparency in forex transactions.

Continue Reading
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