- Forex Weekly Outlook January 15-19
The German coalition agreement and the change in European Central Bank’s stance towards monetary policy boosted Euro attractiveness against G10 currencies last week. The Euro single currency rose to a 3-year high against the U.S. dollar following a series of weaker than expected economic numbers.
The Euro gained 163 pips against the U.S. dollar to trade above 1.2116 levels on Friday, suggesting that the strong economic growth in the region amid political accord reached in Germany is supporting Euro bullish run. Even though the region economy remained strong with rising demand, the U.S. fundamentals are equally strong with consumer prices gradually picking up and businesses like Wal-Mart announcing pay rise following the tax cut. The U.S. economy is poised for more gains in 2018.
Therefore, break of 1.2116 levels is needed to validate bullish continuation, especially with the odds of the Fed raising rates many times in 2018 increasing. Again, while 1.2500 price level is feasible in 2018, we don’t see it just yet and will treat the current upsurge as a temporary bullish move.
In the U.K., the pound sustained its gains against the U.S. dollar for the fourth week in a roll despite the uncertainty surrounding the Brexit and slowdown in economic data. The pound has gained 420 pips against the U.S. dollar in the last one month to peak at an 18-month high for two main reasons, one, traders believe the pound is undervalued and sold off merely because of Brexit uncertainty. Two, the resiliency of the economy, despite political and economic uncertainties, to expand better than expected in 2017 while at the same time maintaining a record-low unemployment rate. Means, the widely projected global economic growth and expanding economic activities would boost British economic outlook better in 2018 and support the sluggish wage growth.
Again, while the weak U.S. dollar aided this pair move above the 1.3665 level, the renewed interest in the pound is likely to further bolster the pair towards 1.3798 resistance level. Hence, we remain bullish on GBPUSD in the near term as long as the price stays above 1.3665 support levels.
Since the Bank of Japan announced it will reduce its long-dated bond-buying program on Wednesday, the Yen has surged against the U.S. dollar to 111.03. But with experts treating the unexpected change in monetary stance as a sign of growing economy, the Yen is expected to gain even further as traders are already predicting rate hike by the middle of the year.
Also, with the U.S. dollar not very attractive at the moment, the haven status of the Yen and improved global economy fueling growth in the world’s third-largest economy is more likely to aid USDJPY to 109.16 support levels in the coming days. This week, we are bearish on USDJPY with 109.16 as the target.
The rebound in the Euro single currency following the news of German coalition accord and the change in ECB’s monetary stance erased EURNZD’s weekly gains. But as long as 1.7094 holds, our bearish view on this pair stands. One, because of improved in commodity-dependent economies like the New Zealand and the fact that we do not see this pair toppling 1.7481 reached in November 2017.
So we will be treating the bullish pin bar as temporary rebound and wait for further confirmation above or below the 1.6804 levels to affirm our position on EURNZD. Meaning, this week we are neutral on EURNZD but will update on the first sign of confirmation.
Despite the weak Swiss fundamentals, the Swiss Franc sustained its gains against the U.S. dollar last week.
As previously stated, the weak U.S. dollar sentiment is weighing on this pair and expected to continue this week. Therefore, we are bearish on USDCHF this week with 0.9610 as the target.
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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