FXTM Research Analyst
The main risk event for the Nigerian
economy today will be the pending Manufacturing and Non-manufacturing PMI
reports for April. Investors will be keeping a close eye on these to see
whether the Purchasing Managers Index indicates that Nigeria’s manufacturing
and non-manufacturing sectors remain in expansive territory. http://www.tectono-business.com/2016/02/contemporary-step-by-step-guide-to.html Such a development will add to the positive
sentiment that has already been lifted by rising Oil prices.
Elsewhere, the Bank of Japan as widely
expected kept interest rates unchanged at -0.1 percent, while also stating that
it will maintain these extremely low rates until the Spring of 2020. The
central bank also lowered its GDP and CPI forecasts for Fiscal Year 2019, while
downgrading its view on business sentiment.
Markets however, believe the BoJ can’t
tighten policy until Q4 2020, given that Japan’s inflation data remains well
below the central bank’s 2 percent target. Policymakers are also bracing for
the economic uncertainties posed by a consumption tax hike slated for October
that threatens to crimp domestic consumption. http://www.tectono-business.com/2016/02/contemporary-step-by-step-guide-to.html At the same time, the world’s third-largest economy
still has to contend with persistent external headwinds, such as slowing global
growth and rising trade tensions between major economies.
This confluence of domestic and
external factors is weighing on the Yen, which is already Asia’s second
worst-performer so far in 2019. Should headwinds grow stronger for the Japanese
economy, perhaps forcing the BoJ to ease policy further before any tightening
can be done, the Yen may extend losses against the US Dollar over the course of
the year.
Currency spotlight – US Dollar
A vulnerable Yen, along with declines
in the Euro, have pushed the Dollar Index above the psychological 98 level for
the first time since May 2017. http://www.tectono-business.com/2016/02/contemporary-step-by-step-guide-to.html
Investors now await the upcoming US Q1
GDP announcement, with the US economy standing in stark contrast to what Europe
is experiencing currently, the latter’s outlook made more dire by the
unexpected decline in confidence from Germany and France.
This divergence is providing support
for the Greenback, and it could get another leg up, should the US GDP reading
exceed market expectations of 2.2 percent on Friday. However, appetite for the
Dollar is likely to take a hit if the GDP data fails to meet expectations.
Commodity spotlight – Gold
The Dollar’s year-to-date climb has
kept Gold rooted near its lowest level in 2019, below the
psychologically-important $1,280 level, as markets keep an eye on the $1,265
support line. http://www.tectono-business.com/2016/02/contemporary-step-by-step-guide-to.html
It’s proving increasingly difficult for
Gold bulls to prove their case under present market conditions, thanks to a
broadly stronger Dollar, equity markets hanging on to most of their
year-to-date gains and cautious optimism over US-China trade talks.
However, dark clouds still linger over
the global economy, and data points that signal a turn for the worse for the
worldwide context could spark a massive rebound for Gold back towards the
$1,300 handle.
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