Forex

Forex Weekly Outlook June 5-9

Published

7 years ago

June 4, 2017

A money changer holds Turkish lira banknotes next to U

Forex Weekly Outlook June 5-9

The U.S. dollar declined against all the 16 major currencies on Friday after data showed the economy added fewer jobs than projected in May. Employers added 138,000 jobs last month, which is below 182,000 jobs expected by economists. This brings the monthly average payroll gains this year to 162,000, a step below the 187,000 recorded in 2016.

Even though, the unemployment rate improved to a 16 year low of 4.3 percent. Wage rise remains stagnant and participation rate continues to drop amid political uncertainty in the world’s largest economy.

Therefore, while most experts believed this is a temporary dip and not enough to stop the Fed from raising rates this month, it is highly unlikely that the Fed will hike rates amid moderate pricing and an okay labor market with a weak participation rate. Hence, one of the reasons stocks surged after the data were released, signalling a lack of conviction among investors that the Fed will raise rates this month.

Also, the market has started pricing in the infrastructure plan and privatisation due to be announced tomorrow by the President. This is expected to boost the outlook of those stocks even more.

In the U.K., the Labour party has substantially closed the gap between Theresa May’s Conservative party ahead of June 8 election. Creating uncertainty in the financial markets and further plunging the embattled pound against major currencies.

Accordingly, the housing price declined (0.2%) for third consecutive month in May, making it the worst longest streak for the housing market in 9 years.

However, the strong domestic demand continued to aid manufacturing activities, especially with the steady earnings. But considering the percentage contributed by the manufacturing sector to the entire economy its performance may not be enough to boost weak growth during Brexit discussion.

Oil, the OPEC and non-OPEC were able to extend production cuts by 9 months but the oil prices continued to decline as the U.S. production grows. Accordingly, the decision of President Donald Trump to pull out from Paris Climate agreement would aid shale producers and it is expected to further disrupt OPEC strategy going forward. Likewise, OPEC is expected to react with an appropriate strategy, possible a 3 months rollover.

Generally, the political uncertainty in the U.S continued to weigh on business sentiment ahead of former FBI director, James Comey, testimony on Thursday. While, the U.K.’s June 8 election is expected to increase the volatility of pound pairs and provide a clue of possible Brexit direction.

This week, GBPJPY and USDJPY top my list.

GBPJPY

The pair closed below key support, 142.42, price levels last week. This just doesn’t signify the continuation of the bearish trend started a month ago but also a reflection of the pound struggle ahead of June 8 election.

On the other hand, the Japanese Yen outlook remains positive with the economy growing for a fifth consecutive quarter, its longest expansion in 10 years. Also, exports and job creation continued to strengthen, even though consumer spending and wage growth remain low. The economic outlook is stable.

Therefore, this week I will be looking to sell below 142.42 for 134.90 targets. But if Theresa May’s Conservative loss to Labour Party I will expect a mild-strong outlook of the pound. A sustained break of 134.90 support levels should attract enough sellers to open up 129.85 support.

USDJPY

The pair has lost about 411 pips since President Trump sacked FBI director, James Comey a month ago. Dropping below the 111.81 psychological levels deep into the descending channel as shown below.

However, with the uncertain in the U.S. and strong Japan’s economic data, there is a possibility of the Yen gaining once James Comey testimony started this. Also, the U.K. uncertainty is expected to increase demand for safe haven assets and further bolster the Yen strength.

Therefore, this week, I will be selling the pair below the bearish engulfing pattern completed last week for 109.56 support. A sustained break would open up 107.47.

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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

Nigerian Naira Falls to N1,641.27 Amid Improved FX Supply

Published

9 hours ago

October 12, 2024

Iyanuoluwa Martins

The Naira closed the week weaker against the US Dollar in the Nigerian Autonomous Foreign Exchange Market (NAFEX) on Friday, October 11 to N1,641.27/$1, as the local currency lost 1.15 per cent at the specialised window, according to data obtained from FMDQ Securities Exchange.

The week’s closing value was down N18.70 compared to N1,622.57/$1 published in the preceding session on Thursday.

There was a surge in turnover recorded on Friday as secondary data showed an aggregate of $616.73 million cleared on record, compared to $145.56 million, a rise of $471.17 million or 323.7 per cent.

This is more than $543.5 million announced by the Central Bank of Nigeria (CBN) announced that it sold to authorised dealer local deposit money banks (DMBs) to reduce observed market volatility driven by high demand for commodity imports and seasoned demand for FX between September 6 and 30, 2024.

The rise in supply could be a result of fresh CBN intervention in the market after it had paused for the past two weeks.

In a different pattern, the local currency closed flat against the Pound Sterling and the Euro in the week’s closing session at the official FX market.

Trading against the British currency, the local currency closed at N2,126.26/£1 while it closed at the rate of N1,772.69/€1 against the Euro.

In the Parallel market, the Naira gained on the American currency as it closed at N1,673.54 to the US Dollar, a rise of 94 Kobo compared to N1,674.48/$1 it closed during the Wednesday trading session.

The Naira strengthened its value against the Pound Sterling in the official market by N3.70 to sell at N2,136.68/£1 compared with the preceding session’s N2,140.38/£1 and followed the same pattern against the Euro as it appreciated N7.54 to quote at N1,830.29/€1 versus the previous day’s rate of N1,837.83/€1.

The local currency also appreciated N8.59 to close at N1,202.47 per Canadian Dollar, compared to Wednesday’s N1,211.06 per CAD.

Naira

Naira Records Marginal Rise on Dollar as Supply Weakens

Published

2 days ago

October 11, 2024

Iyanuoluwa Martins

The Naira exchange rate improved slightly in the official forex market as the Central Bank of Nigeria (CBN) failed to resume the retail Dutch auctions again.

The Naira rose by 0.16 percent on the US Dollar at the Nigerian Autonomous Foreign Exchange Market (NAFEM) to exchange at N1,622.57/$1 on Thursday, October 10 amid a further drop in supply at the official market.

The local currency rose on the greenback by N2.56 versus N1,625.13/$1 which it closed at the previous session on Wednesday.

Demand for foreign currency continues to overshadow FX liquidity, leaping exchange rate movement tight across the markets.

Data showed a decline in supply as the turnover published on the FMDQ Group website stood at $145.56 million. This indicated that the session’s turnover fell by 14.7 percent, indicating an appreciation of $25.04 million compared to the $170.60 million published in the last trading session.

Meanwhile, the Naira witnessed losses against the Pound Sterling and the Euro. The domestic currency made a N41.18 slide on the British currency to wrap the penultimate session at N2,126.26/£1 from N2,085.08/£1 that it sold at the previous session.

In the same trend, against the Euro, the Nigerian currency closed at N1,772.69/€1 versus N1,746.58/€1, indicating an N26.11 depreciation.

In the Parallel market, the Naira closed at N1,674.48 to the US Dollar, a difference of N22.32 compared to N1,652.16 it closed during the Wednesday trading session.

The gap between official and parallel market rates had crossed N120 in the recent past until the Central Bank of Nigeria FX intervention which has brought the gap within N50-N60 on the greenback.

The Naira weakened its value against the Pound Sterling in the official market by N27.19 to sell at N2,140.38/£1 compared with the preceding session’s N2,113.19/£1.

It followed the same route against the Euro as it appreciated N22.57 to quote at N1,837.83/€1 versus the previous day’s rate of N1,815.26/€1.

The local currency also pulled a N4.66 depreciation to close on the Canadian Dollar at N1,211.06 against Wednesday’s N1,206.40 per CAD.

Naira

Naira Gains on Dollar at Black Market, Falls at Official FX Market

Published

3 days ago

October 10, 2024

Iyanuoluwa Martins

The Naira strengthened on the US Dollar at the black market but went the other route in the official market on Wednesday, October 9.

The local currency gained N15.23 from the N1,667.39 it closed in the previous session to settle at N1,652.16 at the black market on Wednesday.

At the Nigerian Autonomous Foreign Exchange Market (NAFEX), the local currency lost N63.37 or 4.1 percent to close at N1,625.13/$1, weaker from N1,561.76/$1 it closed on Tuesday.

The daily supply of FX as measured by secondary data from FMDQ Securities Exchange Limited indicated that turnover slumped by $83.08 million or 32.7 percent to $170.60 million from $253.68 million.

The decline in supply comes as the Central Bank of Nigeria (CBN) eased with the latest data indicating that the country is not making enough foreign earnings.

For instance, Foreign Direct Investment into Nigeria in the second quarter of 2024 dropped to $29.83 million, a 65.33 percent drop compared to the $86.03 million recorded in the same period last year.

The development marks the lowest level in the last ten years.

It also reflected in both portfolio investments and foreign currency loans as Nigeria’s foreign portfolio investments for Q2 2024 stood at $1.40 billion, marking a sharp decline of 74.97 percent from $5.60 billion recorded in the preceding quarter, and a 65.3 percent drop compared to the $4.05 billion reported in Q2 2023.

Similarly, foreign loans, which constitute a substantial portion of Nigeria’s capital importation, recorded an inflow of $1.15 billion in Q2 2024, reflecting a 74.98 percent decrease from $4.60 billion in Q1 2024.

However, the Naira strengthened its value against the Pound Sterling in the official market by N46.54 to sell at N2,085.08/£1 compared with the preceding session’s N2,131.62/£1.

It followed the same route against the Euro as it appreciated N42.40 to quote at N1,746.58/€1 versus the previous day’s rate of N1,788.98/€1.

The local currency also recorded a gain on the UK Pound Sterling in the black market, the Naira rose to N2,113.19 an N18.94 gain from N2,132.13 and on the Euro, the Naira pulled an N18.37 appreciation to close at N1,815.26 versus N1,833.63 and added 53 cents on the Canadian Dollar to close at N1,206.40 against Monday’s N1,206.93 per CAD.