- Forex Weekly Outlook November 6-10
The US Federal Reserve left the interest rates unchanged last week, citing weak wage growth and low inflation rate. However, the US dollar sustained its earlier gains even though the labor market added fewer jobs than expected in October. The services sector expanded 60.1 and personal spending climbed 1.0 percent in October, up from 0.1 percent in September.
In the UK, the Bank of England raised interest rates for the first time in more than 10 years. The apex bank increased benchmark rate by 25 basis points to 0.5 percent, saying escalating inflation is eroding consumer buying power and business profits.
Here are my pick for this week;
The Australian dollar dipped last week on weaker than expected retail sales number in September. Sales went flat in the month, following a 0.5 percent decline in August. This was after consumer prices climbed just 0.6 percent in the third quarter, also less than projected. Weak wage growth and rising household debt continued to hurt household income and subsequently weighed on consumer spending.
As explained during the week, stable Japanese Yen is more attractive because of its haven status and strong economic fundamental. Technically, AUDJPY closed below the 88.17 price level and 20-day moving average last week. Indicating that weak economic fundamentals and low business confidence are still impacting Aussie dollar attractiveness.
Therefore, this week I remain bearish on AUDJPY with 86.34 support as the target.
After the Bank of England raised rates last week, the pound fell across board because of Governor Mark Carney’s comment that the economy is fragile due to weak new business investment and sluggish wage growth. The market interpreted the comment as no rate hike in 2018, forcing traders to pare their 2018 rates bet.
Since I first mentioned this pair two weeks ago, it has dropped about 218 pips. However, while it closed below the ascending trendline and as a bearish pin bar to hit our target 1 at 1.3046 support level. We need a close below that level to validate bearish continuation. This is because U.K. economy is resilience with Manufacturing, Construction and Services sectors expanding more than expected last month. Even though inflation rate is high and wage growth remains weak, consumers continued to support the economy.
This week, I will look to sell GBPUSD below 1.3046 support level for 1.2868 and expect a sustained break of that level to open up target 2.
Similarly, the Pound failed to sustain its gain against the Canadian dollar last week after rallying above the descending trendline as shown below.
But because of the surge in commodity prices, the Canadian dollar gained across the board last week. This includes the Pound.
Again, the GBPCAD closed below the descending trendline last week and as a bearish pin bar to validate downside continuation. Therefore, this week I am bearish on GBPCAD as long as price remains below the descending trendline with 1.6497 as the target.
I remain bearish on AUDUSD as explained last week.
Akinwumi Adesina Extols Africans in Diaspora on Cross-Border Remittance
African Development Bank (AfDB) President, Akinwumi Adeshina has extolled the tenacity and impacts of Africans in Diaspora on cross-border remittance.
According to the AfDB President, Africans in the diaspora are the continent’s largest financiers through their yearly remittances.
Speaking at an event organised by the Bank in collaboration with the African Union Commission, Adeshina noted that cross-border remittance into Africa is more than development assistance to the continent.
Investors King earlier reported that remittance into Nigeria and other countries in the sub-Sahara Africa region hits $53 billion in 2022.
The AfDB President said, “The value of remittances from the African diaspora doubled from $37 billion in 2010 to $87 billion in 2019, reaching $95.6 billion by 2021. Yet official development assistance to Africa in 2021 was $35 billion, or 36% of the remittances from the diaspora”.
Adeshina added that Egypt and Nigeria are among the top-ten remittance recipients globally, with $31.5 billion and $19.2 billion, respectively in 2021.
While speaking on the advantage of cross-border remittance to the African continent, the AfDB president noted that remittances have helped to meet financial, food, education, and health needs of many Africans, “it as well as serve as countercyclical sources of finance,” he said.
“The African diaspora has become the largest financier in Africa! And it is not debt, it is 100% gifts or grants, a new form of concessional financing that is the key for livelihood and security for millions of Africans” he added.
Similarly, Adeshina further positioned the need to eliminate premium charges on cross-border remittance into Africa. He noted that cross-border into Africa is twice what is it for South Asia.
He concluded that the Africans in diaspora can add more than remittance and investment, noting that they have skills, knowledge and know-how which can be needed for the development of the continent.
“They can help build world-class universities, and they can be mentors for the new generation of Africans,” he said.
E-Naira Transaction Volume Rises to N5 Billion in November Amid Intensified Campaign
More Nigerians embrace eNaira wallet as CBN takes adoption campaign across the nation
The Central Bank of Nigeria, (CBN) has disclosed that e-Naira transaction volume rose to a record N5 billion in the month of November following a series of campaigns initiated to encourage adoption.
Investors King had earlier reported how the e-Naira adoption team visited a number of parks in Abuja and the University of Lagos among other locations to drive the adoption of the digital currency.
Speaking at the Second Edition of the Africa Cashless Payment Conference, CBN’s Director of Information and Technology, Hajiya Rakiya Mohammed noted that transaction on the e-naira platform does not attract any charges.
She stated that Nigeria’s financial ecosystem is large to accommodate everyone.
Hajia Rakiya added that the e-Naira platform can be operated in any of Nigeria’s major local languages, stating that onboarding onto the e-Naira platform is a simple process.
She further stressed that the primary goal of the e-naira is to reduce the amount of cash in circulation, thereby downsizing the cost of producing paper currency, increase in revenue and direct disbursement to citizens.
Meanwhile, the e-Naira circulation has reached N401.82 million as more Nigerians embraced the digital currency.
It could be recalled that on October 25, 2021, CBN launched the e-Naira making Nigeria the first African country to have a digital currency.
During the unveiling of the e-Naira in Abuja, President Muhammadu Buhari stated that the digital naira would increase remittances, foster cross-border trade, improve financial inclusion and enable the government to make welfare payments more easily.
On his part, the CBN Governor, Godwin Emefiele disclosed that the e-Naira offered Nigerians endless possibilities in using financial services.
While admonishing more Nigerians to embrace the digital naira, Hajia Rakiya noted that “both banked and unbanked can use it, and it can be done through USSD *997#. We have integrated it with telecoms and NIBBS instant payments plus integration with money transfer operations so you can use e-naira for cross border”.
CBN Will Redesign Naira Notes Every Five to Eight Years; Say Emefiele
The central bank will henceforth redesign the nation’s legal tender every five to eight years
Governor of the Central Bank of Nigeria (CBN), Godwin Emefiele has said the bank will henceforth redesign the nation’s legal tender every five to eight years.
The apex bank governor revealed at the unveiling of the new naira notes on Tuesday.
Godwin Emefiele explained that the naira redesign is in line with global best practice noting that the naira needed to be redesigned and re-issued every five to eight years.
According to the CBN governor, previous administrations lacked the political will to approve the redesign of the naira notes. Stating that it is regrettable that the naira has not been redesigned for the past 19 years.
“In the past, I have to confess that attempts by the CBN to redesign and re-issue the naira notes have been resisted. It is only President Muhammadu Buhari that has exhibited the courage to do so,” the CBN governor stated.
Emefiele added that going forward, naira notes will be redesigned at intervals to address some peculiar issues.
“After today, the CBN will begin to redesign and reissue the naira every five to eight years,” he said.
Investors King had earlier reported that President Muhammadu Buhari unveiled the redesigned naira notes at the Federal Executive Council (FEC) meeting today.
Among those who joined the president with the unveiling include the CBN governor and the EFCC chairman.
Recall, in October, the CBN announced it will redesign the N200, N500 and N1,000 notes in line with its mandate.
Meanwhile, the CBN governor has disclosed that the new naira notes can not be counterfeited because of the features embedded in them.
Similarly, he added that security agencies would be monitoring people making withdrawals at the counter to sniff out money laundering and unravel illegal usage.
“The CBN has moved to a cashless economy. We will restrain the volume of cash someone will withdraw over the counter. We will follow up with the person’s data to know the reason for such withdrawal,” he concluded.
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