Depressed oil
prices will not only shave government revenues but also the nation’s ability to
implement its 2019 budget which pegged oil prices at $60 per barrel. If the
Central Bank of Nigeria finds itself in a difficult position to defend the
Naira amid falling external reserves, inflationary pressures are likely to make
a return as the Naira weakens. The near-term outlook for the economy paints a
gloomy picture amid weak oil prices, rising inflationary pressures and possible
depreciation of the Naira.
However, with
GDP potentially bolstered by increased government spending ahead of the
presidential elections next year and diversification in play, there is still
some light at the end of the tunnel.
Market sentiment hangs on G20 Summit
Conflicting
signals over the direction of trade between the world’s two largest economies
are poised to place investors on an emotional rollercoaster ride ahead of this
weekend’s G20 meeting.
It was only on Monday US President Donald
Trump stated that he was “highly unlikely” to suspend planned increases to
existing tariffs on Chinese goods. One day later, White House economic adviser
Larry Kudlow expressed optimism that a trade deal between the United States and
China was still a possibility. With Trump’s remarks clashing head-on with
Kudlow’s positive comments, the US administration is clearly adopting a
classical good cop, bad cop strategy leading up to trade talks. Will this
method work with China? This is the question on the mind of many market
players.
In a perfect
world, the best-case scenario for financial markets will be for both sides to
find a middle ground on trade and secure a breakthrough deal. However, this
outcome is highly unlikely with investors closely observing for any display of
co-operation or interest in further negotiations to ease trade tensions. The
worst-case scenario for markets will be if talks descend into disagreements on
trade which may fuel fears over a trade war between the United States and China
becoming reality.
Dollar remains the king of the hill
Dollar strength
is set to remain a dominant market theme this week thanks to renewed trade
tensions and expectation of higher US interest rates.
Buying sentiment
towards the Dollar brightened yesterday following hawkish remarks from Fed Vice
Chair Richard Clarida while uncertainty over trade fueled upside gains.
Investors will be keeping a close eye on the pending second estimate of
third-quarter GDP growth figures to gauge the health of the US economy. There
will be a special focus on Fed Chair Jerome Powell’s speech, which will most
likely be closely scrutinized for clues on how many more times the Fed plans to
raise rates in 2019. If Powell strikes a hawkish note, the Dollar Index has the
potential to rally towards 98.00.
Another
painful day for the British Pound?
The story
defining the British Pound’s painful depreciation continues to revolve around
Brexit-related uncertainty and political drama in Westminster.
Matters could be
worsened for the Pound if today’s UK Treasury’s Brexit forecast paints a very
gloomy outlook for the UK economy post Brexit. Some parts of the Treasury
report have already been leaked by the Telegraph this morning with the UK seen
to be £150bn worse off under a no-deal. With GDP also projected to be 7.6%
lower under a no-deal scenario over a 15-year period, things could get very
messy to the run-up of the official Brexit deadline.
In regards to
the technical picture, the GBPUSD is firmly bearish on the daily charts with
bears eyeing the 1.2700 level.
Commodity spotlight – Gold
Gold was treated
without mercy by an aggressively appreciating Dollar yesterday with prices
sliding towards the $1,212 level.
The heavily
bearish price action witnessed on the yellow metal confirms how its trajectory
remains heavily influenced by the Dollar’s performance and US rate hike
expectations. With the Dollar likely to remain supported by safe-haven flows
and expectations of a rate hike in December, Gold is likely to witness further
downside. Sustained weakness below $1,214 could inspire a move back towards the
psychological $1,200 level.
Have you heard this? Many Nigerian exporters have been defrauded of huge amount of money in the process of exporting commodities to foreign countries. Do you know why? They were not trained on export operations, management, documentations and the best methods of payment in export trade. This is terrible!!! Nigerians cannot continue to lose money to foreigners in the course of export business. Exporters, why don’t you get a practical manual that teaches the stages of export trade from processing and packaging of commodities to receipt of payment by the foreign buyers. It teaches export operations, export management, export documentations and methods of payment in export trade? It is a contemporary step-by-step guide to export trade. It tells all the contemporary dynamics in export trade. To get it, click on the link below:
http://www.tectono-business.com/2016/02/contemporary-step-by-step-guide-to.html
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