Forex

Forex Weekly Outlook August 28 – September 1

Published

7 years ago

August 27, 2017

Forex Weekly Outlook August 28 – September 1

The three key Central Banks’ Governors, Janet Yellen, Mario Draghi and Haruhiko Kuroda on Friday agreed that weak global inflation and poor wage growth are impeding central banks from reducing monetary accommodation. Suggesting top global banks are not in a hurry to hike rates just yet.

Also, global uncertainties remain high after North Korea fired 3 short range missiles on Saturday. This is coming amid U.S. political unrest and Brexit ongoing negotiation.

Again, the Bank of Japan Governor, Haruhiko Kuroda, believed the 4 percent economic growth rate recorded by the world’s third largest economy in the second quarter is unsustainable and vowed to maintain an accommodative policy for some time.

Overall, the weak wage growth and low consumer prices remain a concern for central banks. However, growing job creation and moderate domestic spending have helped sustain growth in most nations.

This week, GBPJPY, NZDJPY, USDCAD, and GBPUSD.

GBPJPY

Since I first mentioned this pair two weeks ago, it has plunged by another 69 pips. However, the volume of trade remains low. But with the U.K consumer spending waning and economic growth stagnant at 0.3 percent, the lowest among Group seven nations. It is right to expect a further decline of the British pound —especially as the third leg of Brexit negotiation commences this week.

Technically, since this pair closed below the ascending channel two weeks ago, it has failed to break 142.42 resistance level and has remained below the 20-day moving average.

This week, I remain bearish on this pair as long as 142.42 resistance holds.

NZDJPY

As explained last week, this pair dropped 79 pips to hit our first target at 78.83. But failed to closed below key support level to validate bearish continuation after the Bank of Japan Governor, Haruhiko Kuroda said inflation rate is far from BOJ’s 2 percent target and wage growth remains low even with recent progress, therefore, he is not looking at unwinding balance sheet or raising rates until these imbalances normalized. This statement weakened the Yen outlook marginally, however, the rising global uncertainties continued to boost Yen attractiveness because of its haven status and growing economy.

Therefore, this week I will look to sell this pair below 78.83 support levels that double as the ascending channel as seen above for 76.25 support, our target 2.

USDCAD

The USDCAD closed slightly below our key support (five weeks ago target 1) to reaffirm bearish continuation. Again, while the US dollar attractiveness is weighed upon by uncertainties, the Canadian dollar strength is also impacted by the growing US uncertainties, its largest trading partner.

However, the Canadian fundamentals just like the US are solid but with minimal domestic headwinds, the economy continued to create new jobs and the rising housing cost has been curbed. Making the Canadian dollar more attractive to investors than the US dollar, especially after the Bank of Canada raised rates for the first time in 7 years.

This week, I remain bearish on this pair and will look to sell below 1.2494 resistance for 1.2217 targets, our second target 5 weeks ago.

GBPUSD

The weak US dollar is aiding the British Pound, even though the U.K economic data shows the economy has started slowing down ahead of Brexit negotiation. The pound is likely to gain against the US dollar just like other major currencies are expected to surge as the Donald Trump administration looks to access the damage of Harvey continuous rain damage, estimated at $24 billion and the danger of North Korea 3 short range missiles.

While I remain bearish on this pair, I will be standing aside this week to watch price action as I expect the US dollar to dip further this week. However, on a sustained break of 1.2785 support level, I will look to sell for 1.2602 targets.

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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

Naira Falls to N1,676.90/$1 at Official Market, Slides to N1,708.87/$1 at Alternative Window

Published

13 hours ago

November 5, 2024

Iyanuoluwa Martins

The Naira depreciated at the Nigerian Autonomous Foreign Exchange Market (NAFEM) by 0.61 percent and sold against the US Dollar at N1,676.90/$1 on Monday, November 4.

At the official market, the domestic currency recorded a N10.18 drop versus N1,666.72/$1, valued at the previous session on Friday.

Equally at the black market, the Naira lost N4.76 against the greenback to close at N1,708.87 to the US Dollar compared to N1,704.11/$1 it closed on Friday.

The outcomes came as the weak supply gripping the marker cross paths with high seasonal demand placing pressure on the local currency.

This occurred as supply dropped further at the session as turnover published on the FMDQ Group website stood at $79.47 million indicating that the session’s turnover fell by 15.7 per cent, indicating that there was a decrease of $14.75 million compared to $94.22 million published the previous day.

With the year coming to a close, there has been a higher demand for FX but with the Central Bank of Nigeria (CBN) limiting interventions, constraints have seen a volatile outcome for the local currency.

Equally, the domestic currency also witnessed losses against the British currency and the Euro in the week’s opening session.

On the Pound Sterling, the local currency made a loss of N3.38 to wrap the session at N2,160.63/£1 from N2,157.25/£1 that it sold at the previous session and against the Euro, the Nigerian currency closed at N1,816.40/€1 versus N1,814.79/€1, indicating an N1.61 depreciation.

The local currency also declined in its value against the British currency in the black market as it dropped by N9.63 to sell at N2,217.39/£1 compared with the preceding session’s N2,207.76/£1 and followed the same pattern against the Euro as it depreciated N10.73 to quote at N1,862.98/€1 versus the previous day’s rate of N1,852.25/€1.

The Naira, however, had a different trend against the Canadian Dollar as it appreciated by N1.66 to close at N1,222.33 per Canadian Dollar, compared to Friday’s N1,223.99 per CAD.

CBN’s limited capacity to sufficiently intervene across the market segments and suboptimal inflows from Foreign Portfolio Investors will continue to impact the trajectory of the local currency in coming weeks, analysts said.

Measures that don’t translate to more injection of FX into the pressured market will only provide temporary reprieve, they added.

Meanwhile, the CBN will soon begin to test run its automated FX platform to increase market confidence and reduce speculative trading.

Naira

Naira Appreciates to N1,666 Per Dollar at FX Market, N1,704.11 at Parallel Market

Published

4 days ago

November 2, 2024

Iyanuoluwa Martins

The Naira appreciated by 0.5 percent against the US Dollar in the Nigerian Autonomous Foreign Exchange Market (NAFEX) on Friday following an N8.77 rise to close at N1,666.72/$1 compared with Thursday’s closing rate of N1,675.49/$1 despite worsening supply in the market.

The daily supply of FX as measured by secondary data from FMDQ Securities Exchange Limited indicated that turnover fell by $72.41 million or 43.5 per cent to $94.20 million from $166.61 million.

However, the local currency slid on the Pound Sterling and the Euro in the final session. For the British currency, the local currency depreciated by N10.10 and closed at N2,157.25/£1 from N2,147.15/£1 while it closed at the rate of N1,814.79/€1, a slump of N23.43 against N1,791.36/€1 against the Euro.

Meanwhile, the Naira rose further by N7.66 against the American in the parallel market segment to close at N1,704.11 to the US Dollar compared to N1,711.77/$1 it closed on Thursday.

Also, the domestic currency extended its gain against the British currency during the final session as the Naira made a further appreciation of N16 to trade at N2,207.76/£1 from N2,223.76/£1 that it sold at the previous session and against the Euro, it appreciated N14.82 to close at N1,852.25/€1 versus the previous day’s rate of N1,867.07/€1.

The local currency gained a marginal N1.62 to close at N1,233.99 per Canadian Dollar, compared to Thursday’s N1,235.61 per CAD.

The Central Bank of Nigeria (CBN) at the recently concluded World Bank/IMF meetings held in Washington, DC last week said the foreign exchange market will not depend on the apex bank’s intervention for supply and stability.

This is evidenced by the stop of sales of Dollars to the market as it plans to improve supply organically without its intervention from time to time while maintaining balance in the market.

“While you might see us intervene from time to time, we are trying to ensure the market is not dependent on the intervention of the central bank.

“I think that we are looking at conditions that market return as much as possible to improve supply organically without the Central Bank having to put in money all the time,” the CBN deputy governor on economic policy, Mr Mohammed Abdullahi, disclosed.

Naira

Naira Loses 2.7% on Dollar at NAFEX, Gains N6 to N1,711/$1 at Parallel Market

Published

5 days ago

November 1, 2024

Iyanuoluwa Martins

The Naira fell by 2.7 percent on the US Dollar at the Nigerian Autonomous Foreign Exchange Market (NAFEX) to exchange at N1,675.49/$1 on Thursday, October 311 as the local currency depreciated despite a slight increase in supply.

In the official market, the domestic currency lost N44.32 on the American currency in the official market versus N1,631.17/$1, which it closed in the previous session on Wednesday.

In a turn of fortune, the Naira rose N6.66 against the greenback in the parallel market segment to close at N1,711.77 to the US Dollar compared to N1,718.43/$1 it closed on Wednesday.

Data showed a rise in supply as the turnover published on the FMDQ Group website stood at $166.61 million indicating that the session’s turnover jumped by 29.2 per cent, indicating a rise of $37.63 million compared to $128.98 million that was published in the last trading session.

Equally, the Naira weakened its value against the Pound Sterling in the official market by N3.75 to sell at N2,147.15/£1 compared with the preceding session’s N2,143.40/£1.

It followed the same path against the Euro, depreciating N9.29 to quote at N1,791.36/€1 versus midweek’s closing rate of N1,782.07/€1.

In a different outcome in the black market, the domestic currency headed up against the British currency during the Thursday session as the Naira made an appreciation of N10.86 to wrap the session at N2,223.76/£1 from N2,234.62/£1 that it sold at the previous session.

However, the Naira followed a different pattern against the Euro as it depreciated N12.51 to close at N1,867.07/€1 versus the previous day’s rate of N1,854.56/€1.

The local currency gained a marginal 9 Kobo to close at N1,235.61 per Canadian Dollar, compared to Wednesday’s N1,235.70 per CAD.

Investors King reports that the Nigerian macro environment is placing pressure on the FX market with latest data showing that there is a high money supply in the system complemented by a wider government budget deficit.

The Central Bank of Nigeria (CBN) revealed that Nigeria’s money supply often known as M3 grew 62.8 percent in the last one year to N109 trillion from N66.9 trillion in September 2023.