The
Naira may take some guidance from how investors view emerging markets
generally, with particular attention being paid towards how the Lira reacts to
the latest Turkish GDP reading and the general threat of further trade tariffs
from U.S. President Donald Trump.
The
indications from early Asian trading that both the Indian Rupee and South
African Rand have resumed the week under weakness against the Greenback
suggests that buying sentiment towards those currencies belonging to markets
with high account deficits remains limited. However, with Nigeria boasting a
current account surplus, the Naira may be slightly insulated from the brutal
sell-off that has rattled EM currencies. http://www.tectono-business.com/2016/02/contemporary-step-by-step-guide-to.html
Markets on high
alert as Trump ramps up trade threats
Investors
across the globe entered the trading week adopting a cautious approach after
President Trump doubled down his China tariff threats on Friday. http://www.tectono-business.com/2016/02/contemporary-step-by-step-guide-to.html
In a
move that has eroded U.S.-China relations even further, Trump threatened
tariffs on another $267 billion worth of Chinese goods. http://www.tectono-business.com/2016/02/contemporary-step-by-step-guide-to.html With the United States
already poised to slap tariffs on $200 billion worth of Chinese goods and
Beijing reiterating threats to fight back, the U.S.-China trade war could reach
dangerous heights. The growing fears of an all-out tit-for-tat trade war
between the world’s two largest economies are likely to fuel risk aversion,
ultimately punishing global stocks and emerging markets.
Focusing
on emerging markets, weakness is set to remain a recurring theme amid global
trade tensions, a broadly stronger Dollar and prospects of higher U.S. interest
rates. With turmoil in Turkey and Argentina triggering contagion fears,
appetite for emerging market assets and currencies is likely to continue
diminishing. http://www.tectono-business.com/2016/02/contemporary-step-by-step-guide-to.html In the EM currency space,
the outlook remains tilted to the downside in the near term, especially for
those currencies with high current account deficits.
In the
commodity markets, Gold has -again struggled to find any support despite
escalating U.S.-China trade tensions denting investor confidence and promoting
risk aversion. The bearish price action witnessed in recent weeks continues to
highlight how Gold’s trajectory remains heavily influenced by the Dollar’s
performance. http://www.tectono-business.com/2016/02/contemporary-step-by-step-guide-to.html With King Dollar spoiled
by expectations of higher U.S. interest rates and safe-haven demand, this could
mean nothing but pain and misery for zero-yielding Gold.
It is
worth noting that the Dollar has snatched away a fair chunk of Gold’s
safe-haven allure with investors turning to the Dollar in times of uncertainty.
Focusing on the technical picture, bears wrested back control after prices
secured a weekly close below the $1,200 psychological level. Sustained weakness
below this level could encourage a decline towards $1,180. http://www.tectono-business.com/2016/02/contemporary-step-by-step-guide-to.html
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