- Forex Weekly Outlook January 16-20
The US dollar declined against most of its counterparts last week, after president-elect insisted that companies importing into the U.S. must pay border tax, except they move their jobs to the U.S. Even though the retail sales surged 0.6 percent in December and the Federal Reserve Chair, Yellen Janet was certain the economy faces no serious short-term obstacles. The uncertainty surrounding the incoming administration is hurting the attractiveness of the US dollar.
But with the producer price index increasing 0.3 percent in December, and Trump expected to implement his aggressive fiscal spending, the Fed is likely to follow up with a similar monetary policy by hiking rates at least three times in 2017 to manage inflation. This is projected to renew the attractiveness of the US dollar and boost its exchange rate against its counterparts.
Nevertheless, investors are waiting for Yellen Janet speech due on Thursday for clues on monetary stance after consumer prices data scheduled for Wednesday has been released.
In the UK, industrial production rose 2.1 percent, after data showed consumer spending and services sector continued to support the economy. But the pound sterling plunged against most currencies yet again, as low business confidence about the future of the embattled economy impacts the attractiveness of the currency.
While, the market awaits inflation rate and Prime Minister May speech due on Tuesday for possible clues on monetary policy and Brexit direction, experts have said the Minister will signal “hard Brexit” by focusing more on regaining control of the Britain’s borders and laws as against the widely expected access to the European single market.
This, coupled with key economic data due this week could trigger volatility across the Pound pairs – especially the retail sales, Governor Mark Carney speech, earnings and unemployment rate.
Global Oil, the OPEC members for the first time shown commitment to their pledge, and their readiness to cut production further if the need be, but experts have said sustained price above $55 a barrel will spur more production and dampen current progress, as exempted countries are likely to go aggressive with production and exports. This was after data showed the U.S. output rose by 176,000 barrels a day last week and that the production forecast for the year has been raised also.
However, the surge in oil prices will support the growth of emerging economies and help reduce the foreign exchange gap likely to be created if the US Federal Reserve starts tightening monetary policy to manage consumer prices.
Overall, the financial markets look vague ahead of the new US administration and Brexit, but the US economy is strong and likely to remain so. This week, GBPJPY, USDJPY and last week pick top my list.
The uncertainty created by the Brexit and prime minister May’s comments continued to hurt the Pound sterling. Even after peaking at 148 price levels 5 weeks ago, the pair has lost about 951 pips to trade below 142.42 support (now resistance) levels.
This week, as the world look to welcome Donald Trump as the 45th president of the United States of America, there is likely to be an increase in demands for safe haven currencies as seen last week. Hence, I will be looking to sell below 140.92 resistance for 134.90 as my first target. A sustained break of that level should open up 129.85 support (second target).
For similar reasons, this pair called the top after gaining about 1,384 pips since the emergence of Trump as the president of the U.S. But the pair lost about 250 pips following Trump’s first public conference last week to close at 114.43 support level. This, I will be treating as a risk concern ahead of the new administration’s inauguration. Therefore, I will be expecting the demand for the yen as a safe haven asset to increase while investors await a series of change the president-elect will be passing on to the senate and the ones likely to be approved.
This week, I will be looking to sell this pair below 114.43 price level for 111.81 targets, a sustained break could open up 109.56 support.
This pair is actually unique for the simple fact that the New Zealand dollar gained its last week attractiveness from the increase in demand for safe haven assets and positive outlook of commodity dependent economies. Even though, when data showed its largest trading partner, China, is struggling with capital outflow and the needs to strengthen its overseas alliances to negate Trump’s likely sabotage of their trade relationship, the kiwi continued to gain.
On the other hand, the Canadian currency continued to enjoy strong economic data, increased exports, and moderate manufacturing activities, bolstered by the surge in global oil prices and proposed economic plan by the US president-elect to increase productivity in the US, its largest trading partner.
This week, I remained bearish on this pair as long as 0.9382 resistance holds.
Nothing has changed with EURCAD, last week view holds.
Naira to Dollar Rate Today: Naira Exchanges at N463 to Dollar on Black Market
Naira to Dollar Rate on Black Market Today Stood at N463
The Nigerian Naira to dollar rate slid slightly against the United States dollar on Tuesday on the black market as social unrest continues to weigh on the nation’s economic outlook.
The local currency lost N1 against the US dollar to N463 while against the British pound it remains pressured at N592.
This decline continues against the European Union’s common currency, the Euro. The Naira traded at N540 to a single Euro on the black market.
Naira to dollar rate plunged amid rising economic uncertainties and unclear policy path caused by both COVID-19 and government limited fiscal buffers to cushion the negative impacts of the virus on Africa’s largest economy.
This coupled with the ongoing social unrest by the Nigerian youths to force decorum across the Nigerian Police Force and call global attention to decades of systemic intimidation and harassment of innocent citizens.
The Nigerian Stock Exchange has been closing flat since Thursday and continued this week, suggesting that investors are concerns and wary of eventualities as they look to safeguard their investments.
Again, the projected third-quarter recession, low foreign revenue generation, weak consumer spending and the rising cost of living are some of the factors hurting the Nigerian Naira outlook.
Naira to a Dollar Exchange Rate Dips to N462 at Black Market Amid Social Unrest
Youth Protests Weigh on Naira to a Dollar Exchange Rate on Black Market
The ongoing youth protest in Nigeria continues to weigh on the economic outlook and investors’ sentiment across the board.
The Nigerian Naira to a US dollar exchange rate declined by N1 from N461 on Tuesday to N462 on Wednesday and in the early hours of Thursday at the black market.
Against the British Pounds, the Naira exchanged at N600, down from the N592 it traded on Tuesday. This decline continues against Europe’s common currency as the Naira dipped against the Euro by N2 from N538 to N540 on the black market.
The nationwide protest by the Nigerian youth to curb police brutality and harassment on daily basis continues to disrupt business activities in Africa’s largest economy.
Nigerian youths are saying enough is enough after the death of several youths by the law enforcement agency, Special Anti-Robbery Squad (SARS), that was constituted to curb robbery but gone rogue and made extortions, harassments and in some cases killing of innocent citizens their means of livelihood.
Despite the government disbanding the unit and promise to redeploy officers to other existing units, commands and formations, the youths are saying they want a total discharge of corrupt officers and the entire reform of the Nigerian Police Force (NPF) before they will even consider backing down on the ongoing protest, especially after politicians started sponsoring thugs to attack peaceful protesters in Lagos and Abuja.
The Nigerian Stock Exchange closed flat on Wednesday amid rising uncertainty surrounding the government’s ability to de-escalate the situation given the fact that the youths no longer trust the administration or Nigerian government.
The Naira remained weak against global counterparts and expected to plunge further once the National Bureau of Statistics (NBS) release third-quarter Gross Domestic Product (GDP) report expected by many experts to plunge the nation into its second recession in four years.
Naira Declines on the Black Market on Tuesday
Naira Plunges Against Global Counterparts on Tuesday on the Black Market
The Nigerian Naira declined on Tuesday on the black market despite efforts by the Central Bank of Nigeria to prop up the value of the local currency against global counterparts.
The Naira declined by N4 from N457 per US dollar it traded on Friday to N461 on Tuesday morning. Against the European common currency, the Naira fell by N1 to N538 from N537.
However, the local currency improved by N3 against the British pound from N595 it exchanged on Friday to N592 on Tuesday.
Nigeria’s weak economic outlook continues to weigh on the Naira outlook, especially with the economy projected to enter recession in the third quarter.
Despite efforts to cushion the negative effect of COVID-19 on the nation’s economy, unclear policy path amid weak business sentiment and low foreign revenue generation needed to sustain economic productivity in a majorly import-dependent economy drag on Nigerian Naira value and the entire economic outlook.
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