Lukman Otunuga,
FXTM Research Analyst
The economic calendar for Nigeria is
relatively light this week with PMI figures and unemployment data under the
radar. http://www.tectono-business.com/2016/02/contemporary-step-by-step-guide-to.html
Sentiment towards the nation has
already received a boost today after the Stanbic
IBTC Bank Nigeria PMI expanded to 55.5 in April 2019 from 53.6 in the
previous month. With the reading suggesting signs of improving health and
stability in Nigeria’s private sector, this positive sentiment has the
potential to support local equities in the near term. However, external forces
in the form of renewed trade tensions and geopolitical risks may fuel risk
aversion consequently limiting upside gains. http://www.tectono-business.com/2016/02/contemporary-step-by-step-guide-to.html The next major event risk for the Nigerian economy
will be on Friday when the unemployment rate for Q4 is scheduled for release.
Market players will be looking to see whether the improving domestic conditions
have translated to a drop in the unemployment rate.
Speaking of risk-off, financial markets
started the week on an extremely cautious note after US President Donald Trump unexpectedly raised the stakes in trade
talks with China. Risk aversion swept across Asian and emerging markets in
early Monday trading, following the US President’s tweets about raising
existing US tariffs on $200 billion worth of Chinese imports this Friday, while
hinting at new tariffs “shortly” on a separate $325 billion worth of Chinese
goods.
While it remains to be seen whether the
Trump administration will press ahead with the added tariffs, it’s already
evident that markets are taking some risk off the table, undermining the base
case that investors had been pricing in: a formalized US-China trade deal in
the near future. http://www.tectono-business.com/2016/02/contemporary-step-by-step-guide-to.html
With Chinese Vice Premier, Liu He, scheduled to lead a delegation
to Washington this week, the timing of the tweets also suggests that President
Trump is attempting to push through an immediate resolution to the drawn-out
talks. This latest development once again demonstrates how Trump’s tweets can
be a wild card for any attempt to formulate a lasting outlook on global growth,
as trade tensions remain a key overhang for markets.
Dollar creeps higher post US jobs report
King Dollar struggled for direction on
Monday despite Trump’s tariff threats fueling risk aversion. The lack of action
seen in the Greenback could be based on investors digesting last week’s mixed
US jobs report. Although the US labor force continues to display resilience,
wage growth remains a sore spot for the Federal Reserve. Investors will most
likely direct their attention towards Jerome Powell’s speech later in the week
for more insight into interest rate timings. Should the central bank head sound
remotely dovish or fail to bring anything new to the table, the Dollar could
end up weakening.
Commodity spotlight – Gold
Gold is positioned to be heavily
influenced by US-China trade developments and the Dollar’s valuation this week.
http://www.tectono-business.com/2016/02/contemporary-step-by-step-guide-to.html The metal could push back above $1300 if risk
aversion accelerates the flight to safety. However, a move back below $1280
signals further downside towards $1265.
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