- Forex Weekly Outlook March 5-9
The uncertainty in the U.S. continued to weigh on U.S. economic outlook after president Trump announced that the import tariffs on steel and aluminum will be increased to 25 percent and 10 percent respectively. This led to weak U.S dollar as investors abandoned the currency despite strong economic fundamentals.
In the U.K., manufacturing activities grew at an 8-month low in February while construction activities expanded slightly in the month. Signaling a mixed economic data, especially with the uncertainty surrounding Brexit plan following Prime Minister Theresa May’s speech on Friday.
Therefore, a strong services PMI number is needed to better assess U.K. economic position ahead of European Union response to Theresa May’s plan.
In Canada, the economy expanded at a slower pace in the second half of 2017, growing at an annualized rate of 1.7 percent in the fourth quarter. Suggesting that rising household debt has started weighing on consumer spending and likely to worsen economic outlook ahead of NAFTA trade deal with the U.S. Meaning, not just the correlation between the U.S. and Canada’s economy will weigh on Canadian dollar despite strong global commodity outlook but weak trade relation, low inflation, rising debt and overpriced housing market amid new tariffs on imports will hurt the loonie attractiveness, as Canada exports 90 percent of its steel to the U.S., representing 16 percent of the total U.S. steel imports, and also accounts for about 41 percent of America’s aluminum imports.
In Japan, the Governor of the Bank of Japan Haruhiko Kuroda for the first time announced the apex bank may start looking into balance sheet normalization as early as April 2019. This, bolstered Yen’s outlook across the board as investors jumped on it to avert the U.S and Europe’s uncertainties.
This week, USDJPY, CADJPY, NZDJPY, AUDJPY, and GBPJPY top my list.
The uncertainty surrounding the Canadian economic outlook ahead of NAFTA trade agreement and possible tariffs increment is likely to hurt the Canadian currency against the more attractive Japanese Yen in the first half of 2018, especially now that investors are likely to be looking for a weaker currency to trade the Yen against.
Therefore, after dropping more than 230 pips against the Yen last week to bring its total lost since December peak reached at 91.56 price level, to 953 pips. I will be looking to sell CADJPY pair below the ascending channel as shown above, and expect a sustained break below the 81.48 support level to further validate bearish continuation and open up 78.90 support level. However, a break of 80.24 support level, below the 2017’s low, is imperative to our target.
As previously analyzed, the Yen remained the most attractive currency at the moment.
This week, I will expect a sustained break of our last week target at 105.57 support level and break below the descending channel to open up 104.16 as shown above. Again, given strong Japan’s fundamentals and Yen’s haven status, USDJPY is likely to break 100.30 support level by the second or third quarter of this year.
New Zealand economy is projected to slow down on China’s credit control and steel restriction policies instituted by the government to curb rising debt and extreme pollution. Again, the low wage growth, weak inflation, and rising house debt are hurting consumer spending despite the strong commodity outlook.
Similarly, while the New Zealand dollar rebounded slightly against the Yen last week, it remained below 77.07 key support level. Therefore, as previously stated I expect the Yen to sustain its last week gains against the Kiwi dollar this week, and a break of 76.02 support level that doubled as our second target to open up 74.84 (target 3).
The Australian dollar is a commodity-dependent currency, however, while global commodity market is currently better than what was recorded for the larger part of 2017, the possibility of slower Chinese economy due to the new policy is likely to weigh on Aussie dollar outlook in 2018.
Last week, after data showed the Chinese manufacturing PMI plunged to a 19-month low in February, AUDJPY dropped 210 pips to break 82.03 support. Another indication of China’s influence on the Aussie dollar.
This week, I am bearish on AUDJPY and expect a sustained break of 82.03 to increase sellers’ interest as it would have break 2017 low of 81.47. Again, while 80.60 support is key to bearish continuation, a break below that price level should open up 79.14 price level.
Despite the substantial rebound in GBPJPY pair following Theresa May’s speech, I remained bearish on this pair as I doubt the European Union will accept the May’s proposed solution to Irish border going by EU proposal and comments from key policy-makers.
Therefore, as previously stated I remained bearish on GBPJPY and expect a further downward trend towards our second target.
After the first target was met at 0.7226 last week. I will be stepping aside from NZDUSD this week to better assess price action because of the growing uncertainties in the US.
Transparent Exchange Rate Can Boost Nigeria’s Forex Inflow
Transparent Exchange Rate Can Improve Nigeria’s Diaspora Forex Inflow
Experts that gathered at a virtual summit organised by Ecobank Nigeria with a theme, ‘Financial Services & Remittance Solutions for Nigerians in Diaspora: Leveraging Ecobank’s Pan-African offering’, have said Nigeria can boost foreign exchange inflow through proper engagement and a transparent exchange rate.
Mr. Patrick Akinwuntan, Managing Director of Ecobank Nigeria, in his opening speech, said growing evidence has shown that diaspora remittances were positively impacting economies of various nations in the world.
Akinwuntan put the total annual remittances to Nigeria at around $20 billion per year, saying it boosts the nation’s foreign exchange earnings.
Speaking on how these remittances can be sustained, he said constant engagement with Nigerians abroad is imperative and it is the reason Ecobank is leveraging its digital technology through Rapidtransfer App and Ecobank mobile App to ensure affordable and easy transfer of funds by Nigerians abroad to their home country.
“Our dedicated Rapidtransfer, mobile remittance app is a game-changer for the market. It enables Africans and indeed Nigerians wherever they are to easily and instantly send money to bank accounts, mobile wallets and cash collection in – and across – 33 African countries.
“Historically, the cost of sending cross-border remittances to Africa has been far too high at about 6%-7%. Similarly, the process to send funds has long been inefficient and burdensome, with customers typically needing to go physically to an agent sometimes late in the night or in poor weather with attendant discomfort and risks.
“The Rapidtransfer app remittance solution is a quick, easy and reliable digital solution that removes all of these issues. It is indeed a game-changer for Nigerians and all Africans with its sustainable and standout affordability,” he said.
Speaking on transaction charges, the Ecobank Managing Director said transfer fee range from zero to about 3 percent as compared to 6 – 7 percent charge elsewhere.
He added that the bank’s instant transfer and transparent exchange rate is a unique factor its competitors do not possess.
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.
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