Forex

Forex Weekly Outlook October 16-20

Published

7 years ago

October 15, 2017

Forex Weekly Outlook October 16-20

The mixed U.S. economic data and political uncertainty continued to weigh on the U.S dollar. Even though activities in the manufacturing sector rose to a 13-year high in September and services sector expanded at the fastest pace in 12 years last month, the consumer prices rose just 0.5 percent in the month, below the 0.6 percent projected by experts. Suggesting that increased job creation in these sectors has failed to pressure prices enough to validate Federal Reserve’s price projection.

This is one of the reasons the U.S. dollar dipped against its counterparts on Friday and likely to continue this week after President Trump disavow Iran’s deal. However, the weak US dollar should deepen industrial production as seen in August and September, while Saudi Arabia’s decision to cut crude oil export by 560,000 barrels per day in November is expected to further boost gasoline prices and subsequently pressure headline inflation towards the Federal Reserve’s 2 percent target in the final quarter of 2017.

However, the underlying fundamental factors would be temporary in accordance with Federal Reserve’s minutes of September 19-20 that showed policymakers are unclear if factors subduing inflation are just temporary or persistent. Therefore, agreed that incoming data are imperative to rate decision.

Also, even though the odds of rate hike in December may increase with the rise in headline inflation figure, the US dollar may not respond proportionally for two reasons; December rates hike has already been priced in, two, growing uncertainty in the U.S. and President Trump’s inability to push through with tax cut just yet will weigh on the US dollar attractiveness.

Therefore, growing political uncertainties in the country and across the world remains a concern, especially with the whole Euro-area facing populist uprising amid stagnant Brexit negotiation.

This week, I will be looking at AUDJPY, and NZDJPY, NZDUSD, and AUDUSD from last week.

AUDJPY

The Australian economy is struggling with weak retail sales and growing household debt that has eroded consumer spending power. However, weak iron ore price, the largest Australian export product also weigh on the economic outlook but investors and businesses are more concern about the Reserve Bank of Australia’s decision to maintain current monetary policy against other nations cutting back on stimulus amid improved global growth.

Despite these headwinds, the Australian dollar remains resilient in strong demand after dropping below 88.17 two weeks ago. One, because of the rebound in China’s import to 18.7 percent in September. Two, the surge in the attractiveness of emerging currencies following the less than expected consumer prices and the president Donald Trump refusal to sign Iran’s deal bolstered Australian dollar attractiveness last week as investors are risk-averse.

However, while the currency has been favoured by growing uncertainties and improved global economic outlook, the Aussie dollar remained overpriced as stated previously and expected to dip against strong currencies like the Japanese yen, backed by strong and growing economic fundamental.

Therefore, despite the Japanese snap election due on October 22, I don’t see the AUDJPY topping the 22-month high of 90.29 after the bearish pin bar established 4 weeks ago. This week, as long as price remains below the 90.32 resistance level, I am bearish on this pair and will look to sell below 88.17 for 86.34 targets.

Last Week Recap

Improved emerging markets’ outlook bolstered the attractiveness of emerging currencies last week. While I doubt these currencies can sustain current upsurge against the US dollar and Japanese Yen in the long term. I will be standing aside this week to better assess price action and price in Chinese inflation number and revised Japanese industrial production due on Monday.

Similarly, I will be staying away from the EURUSD because of the low volume of trade and surge in risk level due to the growing uncertainty.

NZDJPY

This pair failed to break the ascending channel last week. However, with the New Zealand inconclusive election, I do not see NZDJPY sustaining current bullish momentum for long. Therefore, I will be standing aside this week to monitor price action but would be selling at the first sign of wane as long as price remains below 81.02 levels.

AUDUSD

The weak US consumer prices aided the attractiveness of the Aussie dollar against the US dollar last week. This week, I will be assessing the response of the parliament and the rest of the world to President Donald Trump’s refusal to sign Iran’s deal on Friday and how this plus China’s consumer prices due on Monday will change AUDUSD outlook going forward. Again, I am bearish on this pair on a long-term as I believe Australian dollar is overpriced but the heightened uncertainty continued to weigh on that projection, hence, the reason I am standing aside this week.

NZDUSD

Similarly, the New Zealand currency surged on growing emerging markets attractiveness and weak US dollar. But while Chinese new credit control policy is projected to affect exporting partners like New Zealand, the currency remains resilient amid rising commodity prices. again, I believe the rebound is temporary and merely aided by the US uncertainty. Therefore, the reason I am bearish on this pair as long as price stays below 0.7214, but I would be standing aside this week to better monitor price action and sell at the first bearish continuation signal.

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Samed Olukoya

Is the CEO/Founder of Investors King Limited. A proven foreign exchange research analyst and a published author on Yahoo Finance, Businessinsider, Nasdaq, Entrepreneur.com, Investorplace, and many more. He has over two decades of experience in global financial markets.

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Forex

ABCON President Announces Blueprint for Unified Retail Forex Market

Published

4 hours ago

April 29, 2024

Samed Olukoya

Naira Dollar Exchange Rate - Investors King

The President of the Association of Bureaux De Change Operators of Nigeria (ABCON), Aminu Gwadabe, has revealed plans to establish a unified retail end forex market structure.

This strategic initiative seeks to address volatility and streamline operations across the Bureaux De Change (BDC) sub-sector.

Gwadabe outlined the objectives of ABCON’s blueprint and the need to integrate operators from various segments of the market.

Central to the plan is the inauguration of state chapters to facilitate coordination, integration, and administration of a united market structure.

ABCON intends to extend its automation policies and platforms to all BDC operators nationwide, upgrading its Business Process Platform to enhance efficiency and transparency.

The proposed unified retail end forex market will feature a centralized, democratized, and liberalized online real-time trading platform.

This innovation aims to provide market participants with greater accessibility and transparency while fostering regulatory compliance and government oversight.

Speaking on the vision for the unified market, Gwadabe highlighted the importance of collaboration with regulatory agencies, security operatives, and government bodies to ensure a secure and thriving forex market environment.

Gwadabe reiterated the benefits of a realistic and vibrant retail forex market, aligning with the Central Bank of Nigeria’s (CBN) objectives of achieving true price discovery for the naira and balancing international obligations.

Also, the unified market structure aims to provide market intelligence reports, enhance the image of BDCs, and stimulate employment generation.

Furthermore, ABCON’s initiative aims to combat the proliferation of unlicensed forex platforms by creating a transparent and competitive market environment. By digitizing retail forex transactions and ensuring regulatory compliance, the association aims to capture revenues for the government and curb illicit financial activities.

ABCON, as a self-regulatory body representing all CBN-licensed BDCs, acknowledges the importance of maintaining integrity and adherence to regulatory standards within the sector.

Forex

Yen Hits 34-Year Low Against Dollar Despite Bank of Japan’s Inaction

Published

3 days ago

April 26, 2024

Samed Olukoya

The Japanese yen plummeted to a 34-year low against the US dollar, sending shockwaves through global financial markets.

Despite mounting pressure and speculation, the Bank of Japan (BOJ) chose to maintain its key interest rate.

The yen’s relentless slide, extending to 0.7% to 156.66 against the dollar, underscores deep concerns about Japan’s economic stability and the efficacy of its monetary policies.

BOJ Governor Kazuo Ueda’s remarks at a post-meeting news conference did little to assuage fears as he acknowledged the impact of foreign exchange dynamics on inflation but downplayed the yen’s influence on underlying prices.

Investors, already on edge due to the yen’s dismal performance this year, are now bracing for further volatility amid speculation of imminent intervention by Japanese authorities.

The absence of decisive action from the BOJ has heightened uncertainty, with concerns looming over the potential repercussions of a prolonged yen depreciation.

The implications of the yen’s decline extend far beyond Japan’s borders, reverberating across global markets. The currency’s status as the worst-performing among major currencies in the Group of Ten (G-10) underscores its significance in the international financial landscape.

Policymakers have issued repeated warnings against excessive depreciation, signaling a commitment to intervene if necessary to safeguard economic stability.

Finance Minister Shunichi Suzuki reiterated the government’s readiness to respond to foreign exchange fluctuations, emphasizing the need for vigilance in the face of market volatility.

However, the lack of concrete action from Japanese authorities has left investors grappling with uncertainty, unsure of the yen’s trajectory in the days to come.

Market analysts warn of the potential for further downside risk, particularly in light of upcoming economic data releases and the prospect of thin trading volumes due to public holidays in Japan.

The absence of coordinated intervention efforts and a clear policy stance only exacerbates concerns, fueling speculation about the yen’s future trajectory.

The yen’s current predicament evokes memories of past episodes of currency turmoil, prompting comparisons to Japan’s intervention in 2022 when the currency experienced a similar downward spiral.

The prospect of history repeating itself looms large, as market participants weigh the possibility of intervention against the backdrop of an increasingly volatile global economy.

As Japan grapples with the yen’s precipitous decline, the stakes have never been higher for policymakers tasked with restoring stability to the currency markets. With the world watching closely, the fate of the yen hangs in the balance, poised between intervention and inertia in the face of unprecedented challenges.

Naira

Dollar to Naira Black Market Today, April 25th, 2024

As of April 25th, 2024, the exchange rate for the US dollar to the Nigerian Naira stands at 1 USD to 1,300 NGN in the black market, also referred to as the parallel market or Aboki fx.

Published

4 days ago

April 25, 2024

Samed Olukoya

Naira to Dollar Exchange- Investors King Rate - Investors King

As of April 25th, 2024, the exchange rate for the US dollar to the Nigerian Naira stands at 1 USD to 1,300 NGN in the black market, also referred to as the parallel market or Aboki fx.

For those engaging in currency transactions in the Lagos Parallel Market (Black Market), buyers purchase a dollar for N1,260 and sell it at N1,250 on Wednesday, April 24th, 2024 based on information from Bureau De Change (BDC).

Meaning, the Naira exchange rate declined when compared to today’s rate below.

This black market rate signifies the value at which individuals can trade their dollars for Naira outside the official or regulated exchange channels.

Investors and participants closely monitor these parallel market rates for a more immediate reflection of currency dynamics.

How Much is Dollar to Naira Today in the Black Market?

Kindly be aware that the Central Bank of Nigeria (CBN) does not acknowledge the existence of the parallel market, commonly referred to as the black market.

The CBN has advised individuals seeking to participate in Forex transactions to utilize official banking channels.