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Disappointing Retail Sales Pressures Sterling

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FXTM Research Analyst Lukman Otunuga comments on potential market reactions to the French Presidential elections this weekend.

Sterling attracted a school of sellers during early trading on Friday, following the disappointing 1.8% decline in U.K retail sales in March that rekindled fears of Brexit impacting the U.K economy.

U.K retail sales posted their largest quarterly fall in seven years in the first quarter of 2017, as accelerating prices and a Brexit-fueled Sterling selloff pressured consumers.

With wage growth lagging behind inflation, concerns may continue to heighten over the longevity of the U.K’s prized consumer-driven economic growth.

The Pound remains gripped by the Brexit developments as they continue moving forward and heightened political uncertainty created from the snap general election shocker should limit extreme upside gains.

From a technical standpoint, although the sustainability of the Sterling rebound can be questioned, the GBPUSD remains undeniably bullish on the daily timeframe.

The decisive breakout above 1.2775 could encourage a further incline higher towards 1.3000. On the other hand, if the bearish Brexit fundamentals inspire sellers, then repeated weakness below 1.2775 could open a path lower back towards 1.2600.

French Presidential Election Countdown Begins
The French presidential elections remain a major event risk that has the ability to send serious shockwaves across the financial markets. With recent polls indicating a fierce battle between the four candidates in the first round and millions of voters still undecided, uncertainty remains the name of the game.

Although Emmanuel Macron has been labelled as favorite to become the next French President, an unexpected Marine Le Pen victory could deal a symbolic blow to the unity of the European Union and ultimately create a tidal wave of risk aversion. Investors should remain diligent as we enter the weekend, and be prepared to expect the unexpected when dealing with the elections’ repercussions on the Euro.

From a technical standpoint, the EURUSD has struggled to close above the 1.0750 level, with pre-election jitters exposing the Euro to downside risks. If anxiety continues to heighten, then Euro bears may be inspired to send prices lower towards 1.06850 or lower.

Commodity spotlight – Gold
Jitters surrounding the forthcoming French presidential elections and the ongoing tensions engulfing North Korea have supported Gold this week, with prices balancing around $1280 as of writing. Risk aversion remains rife amid the political risk, with uncertainty accelerating the flight to safe haven investments.

Bulls remain in control on the daily charts and the decreased probability of a U.S interest rate increase in June could provide a foundation for buyers to attack.

If the mounting concerns over Trump’s ability to push through with fiscal spending continue to pressure the Dollar further, then Gold may target $1300 and potentially higher.

Much attention will also be directed towards the French elections this weekend and could spark a wave of risk aversion if the results of the first round rekindle Frexit concerns. From a technical standpoint, Gold bulls remain in control above $1260, with $1300 acting as the next key level of interest.

 

 


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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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