Nigeria’s
GDP disappointed in Q2 by slowing to 1.5% from the 1.95% achieved in the first
quarter of 2018. Although growth during the second quarter was mainly driven by
the services sector and higher than when compared to Q2 of 2017, this did
little to shake off jitters over the growth outlook. With uncertainty likely to
heighten ahead of Nigeria’s presidential elections, and US-China trade tensions
still impacting global sentiment, Nigeria remains exposed to downside risks.
If
inflation starts to rebound amid election spending, the Central Bank of Nigeria
could be forced to maintain status quo on interest rates for the rest of this
quarter.
Market sentiment
boosted by Nafta breakthrough
A
renewed sense of positivity and optimism continues to be felt across financial
markets after the United States and Mexico reached a breakthrough deal over the
NAFTA trade agreement. http://www.tectono-business.com/2016/02/contemporary-step-by-step-guide-to.html
This
highly encouraging development may ease trade war fears, elevate global
sentiment and stimulate appetite for riskier assets. Although it remains
uncertain whether Canada will join the agreement, there is an expectation that
the nation agrees to the new terms in an effort to conserve the three-nation
pact.
Speaking
of risk, Asian stocks closed mostly positive this morning while European
markets edged higher as optimism over a trade deal between the US and Mexico
boosted investor confidence. With Wall Street powering to record highs
yesterday, US equity bulls could make another appearance this afternoon amid
the risk-on sentiment.
Is the party coming
to an end for Dollar bulls?
Dollar
bulls were missing in action yet again today as investors digested Jerome
Powell’s dovish speech at the Jackson Hole Symposium last Friday. http://www.tectono-business.com/2016/02/contemporary-step-by-step-guide-to.html
The
Greenback’s continued depreciation in recent weeks has raised questions on
whether the impressive bull-run could be coming to an end. Buying sentiment towards
the Dollar was dealt the first blow following Donald Trump’s latest criticism
of the Federal Reserve. Bears were offered another opportunity to attack after
the minutes from August’s Fed policy meeting raised concerns over escalating
trade tensions negatively impacting growth.
With
reports of the United States and Mexico securing a trade deal dimming the
Dollar’s safe-haven appeal, further losses could be witnessed in the near term.
Although market expectations remain elevated over the Federal Reserve raising
interest rates next month and possibly December, the Dollar may need fresh
inspiration to rebound higher.
As
regards the technical picture on the daily charts, the Dollar Index has been
relentlessly pounded by sellers in recent weeks with prices trading around
96.65 as of writing. A solid breakdown below the 96.50 level could encourage a
decline towards 94.20 and 94.00, respectively.
Commodity
spotlight – Gold
Gold
prices edged to a fresh two week high on Tuesday thanks mostly to a depreciating
US Dollar. http://www.tectono-business.com/2016/02/contemporary-step-by-step-guide-to.html
The
fact that the yellow metal continues to appreciate despite global risk
sentiment boosted by the US-Mexico trade breakthrough just further highlights
how Gold remains heavily influenced by the Dollar. With the Greenback likely to
experience further weakness following Powell’s dovish speech at the Jackson
Hole Symposium, Gold has scope to appreciate further.
Technical
traders will continue to closely observe how prices behave above the $1200
psychological level. Repeated Dollar weakness could send prices towards $1216
and $1230, respectively. For bears to jump back into the game, prices need to
break back below the $1200 level.
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