A sense
of caution lingered across financial markets after the International Monetary Fund (IMF) cut its global economic growth
projection for 2019, to 3.3% from 3.5%. http://www.tectono-business.com/2016/02/contemporary-step-by-step-guide-to.html
Risks
revolving around US-China trade talks and Brexit have played a leading role in
the IMF’s decision to downgrade growth forecasts to their lowest rate since the
financial crisis of 2008. Growth forecasts for sub-Saharan Africa this year
were also trimmed, to 3.5% from the 3.8% set last October.
Interestingly,
the IMF upgraded Nigeria’s growth forecast this year, to 2.1% from the 2.0%
forecast made in January. http://www.tectono-business.com/2016/02/contemporary-step-by-step-guide-to.html With the nation on a
mission to diversify away from Oil reliance and macroeconomic conditions
stabilizing, the outlook remains encouraging. With no major economic reports
expected from Nigeria this week, the Naira and local stock markets may be
influenced by external drivers.
A busy day ahead
for the Dollar
The US
Dollar may react to some near-term catalysts in the form of the pending March
US inflation print, the minutes from last month’s surprisingly dovish Fed
meeting that are scheduled for release later today, and Fed Chair Jerome
Powell’s speeches over the next three days. http://www.tectono-business.com/2016/02/contemporary-step-by-step-guide-to.html
Should
any of these events support expectations of a Fed rate cut, with the Fed Funds
Futures already expecting a 55 percent chance of a cut by December, that could
see the Dollar Index (DXY) sink back towards 96.80. However, any drop would
likely be mitigated by the worsening global outlook, which is offering support
for the Greenback.
Euro awaits ECB
decision…
EURUSD
bounced off the 1.12 support level in the lead up to the European Central
Bank’s latest monetary policy decision that is due on Wednesday. http://www.tectono-business.com/2016/02/contemporary-step-by-step-guide-to.html
Mario Draghi and his fellow
policymakers are expected to sit on their hands this month, with little room to
maneuver amid significant headwinds. While political tensions in France and
Brexit uncertainties are beyond the central bank’s control, these factors have
been highlighted by the IMF as putting downward pressure on growth, leaving the
ECB to bide for time and watch how these risks manifest themselves in the real
economy.
Taking
a look at the technical picture, the EURUSD remains in a bearish trend on the
weekly charts. http://www.tectono-business.com/2016/02/contemporary-step-by-step-guide-to.html There have been
consistently lower lows and lower highs while the Moving Average Convergence /
Divergence (MACD) trades to the downside. A solid breakdown below 1.120 has the
potential to encourage a move lower towards 1.113 and 1.100, respectively. If
1.120 proves to be a reliable support, the technical bounce is seen taking
prices back towards 1.135.
Pound complacent
even as Brexit summit looms
Pound
traders have narrowed the trading range for GBPUSD to between 1.30 and 1.31,
even as markets remain on tenterhooks awaiting the next developments
surrounding Brexit. http://www.tectono-business.com/2016/02/contemporary-step-by-step-guide-to.html The EU is set to hold an
emergency Brexit summit on Wednesday, amid expectations that the UK will be
told to delay its exit by up to a year.
It
remains to be seen whether such a demand is palatable for UK lawmakers and
Prime Minister Theresa May, whose
request for a short extension to the June 30 was rejected. While a longer
extension may avoid stringing markets along with a series of cliff-edge dates,
it still doesn’t remove the overall uncertainty as to how and when the UK will
exit from the European Union. This implies that the dark clouds of Brexit won’t
be clearing up anytime soon, which should continue weighing on the Pound
throughout the rest of 2019.
Focusing
on the technical picture, the GBPUSD is struggling to keep above 1.3000 on the
weekly timeframe. http://www.tectono-business.com/2016/02/contemporary-step-by-step-guide-to.html A decisive breakdown and
weekly close below this point are likely to open the gates towards 1.2800 in
the short to medium term.
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