Forex

Forex Weekly Outlook July 17-21

Published

7 years ago

July 16, 2017

Forex Weekly Outlook July 17-21

The US dollar plunged against G-10 currencies after data signals the Federal Reserves might not raise rates for the third time this year.

This is because the retail sales fell 0.2 percent in June after declining by 0.1 percent in May. Suggesting that consumers were cautious about spending even with a healthy labour market.

Also, the consumer prices remain steady following a 0.1 percent decline in May. While the lackluster pricing is largely due to the drop in gasoline cost, the inflation rate is below Fed’s 2 percent target and differ Fed chair Yellen Janet’s statement that a healthy labour market would gradually filter through other sectors of the economy and boost wage growth while simultaneously bolstering inflation rate towards Federal Reserves’ target.

In Canada, the Bank of Canada raised overnight cash rate by 25 basis points to 0.75 percent, citing broad growth and strong labour market. This further boosted the loonie attractiveness against the US dollar to over a year high of 1.2648. According to the central bank, the Canadian economy remains robust with growth broadening across industries and regions. However, the bank estimated that real growth will moderate from 2.8 percent projected in 2017 to 2.0 percent in 2018 and 1.6 percent in 2019.

This Week, USDCAD, AUDJPY and EURCAD top my list.

USDCAD

The uncertainty surrounding the US rates hike and the political sphere continue to weigh on the US dollar attractiveness. While Canadian dollar was boosted by the Bank of Canada decision to raise overnight cash rate for the first time in 7 years, the economy remains healthy and projected to sustain current cash inflow for the remaining half of the year.

Technically, the bearish flag pattern started in Jan 2016 signifies bearish breakout after closing below 1.3142 three weeks ago but affirmed bearish continuation following a sustained break of 1.2849 support level last week. Therefore, this week I will be expecting USDCAD to sustain current bearish move with 1.2494 as the first target. A sustained break of 1.2494 support levels should open up 1.2217.

AUDJPY

The Australian dollar continues to gain against the Japanese Yen, bringing its total gain since June to 634 pips. This is 4 pips below 15-month high established during Donald Trump’s rally as shown below. Again, while the Australian economy is expected to strengthen amid improved business conditions and the surge in capacity utilisation, the Japanese Yen is weighed upon by almost zero inflation rate and weak wage growth.

Therefore, this week, I will expect a sustained gain above the 88.17 price levels to open up 90.32 targets. For two reasons, one the weak US economic data that cast doubt on rates hike bolstered Aussie dollar to a two year high against the dollar, meaning there is a surge in demand for the Aussie dollar, especially after the hawkish statement from the central bank.

Two, while Japanese Yen is partly affected by political uncertainty surrounding Prime Minister Shinzo Abe’s party lost in Tokyo, Australia remains free of a political conundrum.

EURCAD

While the Euro-single currency has sustained its gain against most currencies. It has failed to do the same against the Canadian dollar, losing 753 pips since peaking at 1.5256 in June.

Also, for the first time since April, the pair closed below 1.4602 last week and established a bearish pin bar candlestick to validate bearish continuation.

Therefore, if the EURCAD break 1.4444 support level, below the trendline as shown above. I will be looking to sell for 1.4398 targets and expect a break of that level to boost the EURCAD attractiveness towards 1.4172 support level, target 2.

Last Week Recap

CADJPY

Target 2 was hit last week, however, the volume of trade was low due to the growing uncertainty in the region, especially from the US, Canada’s largest trading partner.

This week, I remain bullish on this particular pair and will expect a sustained break of target 2 to open up target 3 as explained last week.

GBPCAD

Last week, this pair gave us 225 pips, hitting our target 1 at 1.6497 and was 2 pips short of our target 2, 1.6353, before rebounding to close above 1.6497 levels.

However, as long as price remains within the descending channel and below resistance level of 1.6704. I remain bearish on this pair and will be looking to sell at a better price.

Up Next

Bank-to-bank Forex Deals Resume

Don't Miss

Australian Dollar Rises to 2-year High

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.

Comments

Naira

Naira Weakens Against Dollar at Official, Parallel FX Markets

Published

1 day ago

October 22, 2024

Iyanuoluwa Martins

The Naira depreciated at the Nigerian Autonomous Foreign Exchange Market (NAFEM) and the parallel market on Monday, signifying more worries for the local currency.

At the official market – NAFEM – the local currency sold for the US Dollar at N1,603.16/$1 as it recorded a 0.15 percent or N2.38 drop versus N1,600.78/$1 it was valued at the previous session on Friday.

This occurred as supply rose at the opening session as turnover published on the FMDQ Group website stood at $359.22 million indicating that the session’s turnover went higher by 2.4 percent or $8.50 million compared to $350.72 million that was published the day before.

At the unofficial market, the domestic currency closed at N1,698.97 to the US Dollar, a drop of N8.15 compared to N1,690.82/$1 it closed during the Friday trading session.

The weakening of the Naira is happening as the nation’s external reserves continue to swell due to lower US Dollar volume sales to boost liquidity in the official FX market.

Latest data showed the balance in Nigeria’s foreign reserves inched to about $39 billion as CBN data revealed that Nigeria now has $38.992 billion as gross balance in the nation’s external reserves.

The CBN has not made do with its promise to prop up the market as it appears to have halted its weekly FX sales

In a different trend, the domestic currency witnessed a flat outcome against the British currency and the Euro in the week’s opening session.

On the Pound Sterling, the local currency closed at N2,153.90/£1 and N1,800.79/€1 on the Euro.

In the parallel market, the local currency depreciated in its value against the British Pound Sterling by N11.69 to sell at N2,213.25/£1 compared with the preceding session’s N2,201.56/£1 and followed the same pattern against the Euro as it lost N10 to quote at N1,845.29/€1 versus the previous day’s rate of N1,835.29/€1.

The local currency also depreciated further by N8.64 to close at N1,225.82 per Canadian Dollar, compared to Friday’s N1,217.18 per CAD.

Naira

Naira Appreciates 3.6% on US Dollar, Trades N1,600

Published

4 days ago

October 19, 2024

Iyanuoluwa Martins

Naira to Dollar Exchange- Investors King Rate - Investors King

The Naira rose 3.6 percent on the US Dollar at the Nigerian Autonomous Foreign Exchange Market (NAFEX) to exchange at N1,600.78/$1 on Friday, October 18 as the local currency appreciated amid an increased supply.

The domestic currency gained N59.71 on the American currency versus N1,660.49/$1, which it closed in the previous session on Thursday.

Data showed a rise in supply as the turnover published on the FMDQ Group website stood at $350.72 million indicating that the session’s turnover rose by 6.2 percent, indicating a rise of $20.54 million compared to $330.18 million that was published in the last trading session.

Meanwhile, the Naira witnessed a flat outcome against the Pound Sterling and the Euro as it closed on the British currency at N2,153.90/£1 and on the European currency at N1,791.06/€1 quoted in the preceding session.

In the Parallel market, the Naira weakened on the American currency as it closed at N1,690.82 to the US Dollar, a drop of N1.31 compared to N1,689.51/$1 it closed during the Wednesday trading session.

In the past months, the Naira has been volatile against the Dollar at the FX market despite interventions by the Central Bank of Nigeria.

The World Bank also said the Nigerian Naira is among the worst-performing currencies in sub-Sahara Africa at the end of August 2024.

In its latest edition of Africa’s Pulse report, the international organisation said the Naira is at par with the Ethiopian Birr, and South Sudanese Pound in terms of decline in the region.

However, the local currency appreciated in its value against the British Pound Sterling in the official market by N54 to sell at N2,201.93/£1 compared with the preceding session’s N2,147.93/£1 and followed the same pattern against the Euro as it gained N4.58 to quote at N1,835.29/€1 versus the previous day’s rate of N1,839.87/€1.

The local currency also depreciated N16.11 to close at N1,217.18 per Canadian Dollar, compared to Thursday’s N1,201.07 per CAD.

Black Market Rate

Naira Gains on Dollar, Pounds, Others at Black Market, Falls at NAFEX

Published

5 days ago

October 18, 2024

Iyanuoluwa Martins

The Naira gained against the US Dollar in the Parallel segment of the foreign exchange market on Thursday, October 17 as it closed at N1,689.51 to the American currency, a gain of N4.41 compared to N1,693.32/$1 it closed during the Wednesday trading session.

The Naira also gained in its value against the British Pound Sterling in the market by N11.19 to sell at N2,147.93/£1 compared with the preceding session’s N2,159.12/£1 and followed the same pattern against the Euro as it appreciated N8.07 to quote at N1,839.87/€1 versus the previous day’s rate of N1,847.94/€1.

The local currency also appreciated N3.59 to close at N1,201.07 per Canadian Dollar, compared to the previous day’s closing value of N1,204.66 per CAD.

Meanwhile, the Naira depreciated marginally for yet another session against the US Dollar in the Nigerian Autonomous Foreign Exchange Market (NAFEX) to N1,660.49/$1.

The local currency rose fell by 0.05 per cent or N91.01 at the window, according to data obtained from FMDQ Securities Exchange compared to N1,659.69/$1 published in the preceding session on Wednesday.

This occurred as supply rose at the penultimate session as turnover published on the FMDQ Group website stood at $330.18 million indicating that the session’s turnover jumped by 86.4 per cent, indicating that there was a decrease of $153.08 million compared to $177.10 million published the previous day.

The surge in supply could be due to peer-to-peer sales as the Central Bank of Nigeria (CBN) has no actively injected liquidity in the market.

Investors King reports that the CBN in August re-introduced the retail Dutch auction system with the aim to sell US Dollar to FX users on demand basis but after the market witnessed more than $1.1 billion injected into the system, there has been slowdown in the auction.

In a different pattern, the local currency closed flat against the Pound Sterling and depreciated on the Euro at the closing session.

Trading against the British currency, the local currency closed at N2,153.90/£1 while it closed at the rate of N1,791.06/€1, a N9.73 appreciation against N1,800.79/€1 against the Euro.