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FXTM Analyses: Yellen Countdown Heightens Market Sensitivity

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Global stocks inched higher during trading on Thursday as the positive combination of renewed US rate hike expectations and resurgence in oil prices elevated global sentiment. European markets charged ahead causing most major equities to conclude positive following the recent polls displaying a lead in the “Bremain” camp.

With uncertainty diminishing ahead of the E.U referendum vote in June, the renewed risk appetite could propel global stocks higher. Although Wall Street displayed exhaustion during trading on Thursday as investor anxiety mounted ahead of Janet Yellen’s speech, prices could be poised for further inclines if hawks are let loose.

Asian markets have started Friday on a positive footing amid speculations of further stimulus in China and this optimism could ripple into Europe during trading today.

Focus on Janet Yellen
Investors may direct their focus towards Janet Yellen today with most seeking additional clarity on when, or if, the Federal Reserve may raise US rates again in Q2. Sentiment towards the US economy has improved this month with an impressive array of domestic data bolstering speculation that US rates could be increased in June or July.

With retail sales, inflation and new homes sales exceeding forecasts, the prerequisites for another US rate hike in Q2 could be fulfilled if US GDP and next week’s NFP exceed expectations. Yellen’s comments could act as a catalyst today for Dollar bulls to rampage if she chants the same hawkish tune as the other board governors.

Although the CME Group Fedwatch tool displays a 26% probability that a June hike could occur, concerns over slowing global growth and persistent China woes may also disrupt the Fed’s efforts to take action.

G7 Warn Of Brexit
The “Bremain” camp was offered additional inspiration during trading this week following the declaration at the G7 meeting warning that a Brexit could pose a serious threat to Global growth.

With major financial institutions and even the G7 highlighting the immeasurable damage a Brexit could cause to the world, expectations have mounted that the UK could actually remain in the E.U after the vote on the 23rd of June.

This Brexit saga is slowing coming to an end and the intensifying debates seem to be dominated by the “Bremain” camp that has been supported by many financial heavy weights.

Although sentiment was bearish towards the Sterling following the mixture of tepid domestic data and fading expectations over a UK rate hike, the optimism that “Bremain” could win may have created a foundation for bullish investors to pounce.

WTI Crude Shocks market
WTI Crude prices surged during trading on Thursday with prices smashing above $50 as an amalgamation of short-term declining production from oil export nations and a weakening Dollar encouraged bullish investors to install a round of buying.

This appreciation is remarkable and could be classified as a technical bounce simply because the fundamental oversupply woes continue to linger in the background.

With anxiety mounting ahead of the OPEC meeting in June, bulls have exploited the sharp periods of volatility with speculative boosts in oil prices causing the commodity to trade to mind blowing levels.

Although prices have traded to 7 month highs, investors should keep diligent as confidence remains very low that an oil production freeze deal will be struck at the meeting.

Gold Under Pressure
Gold stumbled towards nine week lows during trading this week following the painful mixture of Dollar resurgence and growing hopes of a US rate hike which severely dulled the metals allure. Price have sunk towards $1210 and may dip lower if Yellen releases the hawks this evening.

For an extended period Gold has been shackled by US rate hike expectations and with speculations heightened that the Fed could take action, bears could install a heavy round of selling momentum that drags prices below the strong $1210 support.

From a technical standpoint, prices are trading below the daily 20 SMA while the MACD has also crossed to the downside. Thursday bearish candle suggests that this bearish momentum could offer a foundation for sellers to send prices towards $1210 and potentially lower.

 


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E-Financial

Lagos State Appoints MoneyMaster as Payment Partner for “Ounje Eko” Programme

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“Ounje Eko”, the food price discount initiative of the Lagos State Government, has appointed leading payment service bank, MoneyMaster Payment Service Bank Limited (MMPSB), as its collaborator in the bid to ensure ease of payments at the market.

MoneyMaster is one of the Central Bank of Nigeria-licensed Payment Service Banks (PSBs) to promote financial inclusion across Nigeria.

Under the partnership, MMPSB will apply its cutting-edge payment solution to engender easy payment and reconciliation in order to make   the experiences of Lagosians who will be getting their food supplies from the markets pleasurable. Its payment solution is also all-encompassing and ensures real time value to payment destinations.

The mobile bank was appointed as the collection and payment partner for “Ounje Eko” Food Markets programme which is a government initiative serving the five divisions of Lagos State. Consequent on this, MoneyMaster Payment Service Bank will collect payments in 57 LCDAs in the state.

The partnership gives credence to the quality of payment solutions that MoneyMaster is reputed for in its services to its growing business clientele in private and public sectors.

 


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CBN, EFCC Probe Banks, Firms over Alleged Forex Racketeering

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Central Bank of Nigeria (CBN), is investigating irregular foreign exchange transactions and forward contracts valued at approximately $2.4 billion.

CBN, EFCC Probe Banks, Firms over Alleged Forex Racketeering

The  inquiry follows an extensive audit by Deloitte, which scrutinized $7 billion in dollar debts accumulated under the bank’s previous leadership.

In the aftermath of the 294th Monetary Policy Committee meeting in Abuja, Yemi Cardoso, governor of CBN,  disclosed to journalists that the investigation, supported by the Economic and Financial Crimes Commission, among other security bodies, aims to clarify the legitimacy of these FX allocations identified as problematic by the audit.

“It was determined that a number of these transactions did not qualify…they were outright illegal. The law enforcement agencies are now looking into those transactions that as far as we are concerned, are not valid to be paid,” Cardoso detailed, emphasizing the unlawful nature of these forex deals.

The crux of the investigation lies in the audit findings that a significant portion of the scrutinized transactions lacked proper documentation and, in many instances, were deemed outright illegal.

However, the unfolding investigation has raised concerns within the organized private sector, with some entities contemplating legal action against commercial banks for unresolved forex bids.

Despite these tensions, Governor Cardoso reassures that the foreign exchange market remains open and transparent, inviting stakeholders to address their forex needs through the official channels.

Furthermore, Cardoso clarified the distribution of fertilizers to farmers as a one-off measure and not indicative of a shift back to direct interventions by the CBN, underscoring a commitment to strategic, regulatory governance rather than direct market involvement.

 

 

 

 

 

 

 

 


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CBN Urges Banks to Expedite Action on Recapitalisation

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Central Bank of Nigeria (CBN) has directed deposit money banks in the country to expedite action to increase their capital base from the current ₦25bn.

CBN Urges Banks to Expedite Action on Recapitalisation

Olayemi Cardoso, governor of CBN

Olayemi Cardoso, governor of CBN, stated this during the apex bank’s 294th meeting of the Monetary Policy Committee (MPC) on Tuesday in Abuja, when the MPC hiked the interest rate by 22.75% to 24.75%.

The apex bank chief said the MPC examined developments in the banking sector and expressed satisfaction that the industry remained stable. The committee, however, said to guard against risk, commercial banks in the country should accelerate their recapitalisation efforts.

Cardoso said, “The MPC also reviewed developments in the banking system and noted that the industry remains safe, sound, and stable. The committee thus called on the bank to sustain its surveillance and ensure compliance of banks with existing regulatory and macro-potential guidelines.

“The MPC also enjoined the banks to expedite actions on the recapitalisation of banks to strengthen the system against potential risks in an increasingly globalised world.”

 

 

 

 


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