FXTM Research Analyst Lukman Otunuga comments on the vulnerable Euro received a lifeline during trading on Thursday with prices springing above 1.0600 following the hawkish surprise from the European Central Bank that caught markets off guard.
The ever-rising expectations of the Federal Reserve raising US interest rates in March have made the Greenback king this trading week. Although the Dollar Index has found itself under some selling pressure below 102.00 during early trading on Friday, this technical correction could simply provide a foundation for bulls to install fresh rounds of buying in the future.
With the blockbuster ADP report boosting the bullish sentiment towards the Dollar, further appreciations could be expected if today’s NFP exceeds estimates. Bulls remain in firm control moving forward and it may take an extreme anomaly in the pending US jobs report to abruptly cool the heated expectations of the Fed taking action next week.
From a technical standpoint, the Dollar Index is bullish on the daily charts. A weekly close above 102.00 could encourage a further incline higher towards 102.50.
Euro Gifted A Hawkish Lifeline
The vulnerable Euro received a lifeline during trading on Thursday with prices springing above 1.0600 following the hawkish surprise from the European Central Bank that caught markets off guard. Although key interest rates were kept at record lows as expected, the optimism radiating from Mario Draghi regarding the recovery of the European economy simply inspired the Euro bulls.
With the central bank no longer seeing a “sense of urgency” to take further action on monetary stimulus, markets may acknowledge this as a potential inflection point for the ECB to gradually change its monetary stance.
The fact that policymakers are already anticipating that it will not be necessary to lower interest rates further in the future could signal a gradual end to an era of negative rates if the European economy continues to stabilize.
Although the outlook for Europe is starting to look somewhat encouraging amid the positive economic data, the uncertainty gravitating around the elections in Europe continues to weigh heavily on sentiment.
The threat of political developments overshadowing the positive macroeconomic factors could expose the Euro to sharp losses in the short to medium term.
While the current upside momentum on the EURUSD is impressive, gains could be swiftly surrendered today if NFP meets or exceeds expectations. From a technical standpoint, the EURUSD remains trapped in a wide 150 pip range. Bears remain in control below the tough 1.0650 resistance.
Commodity Spotlight – Gold
Gold has been sold off incessantly this week with prices crashing below $1200 as speculations heighten over the Federal Reserve raising US interest rates this month.
Bears have exploited the Dollar’s stability to pressure the yellow metal further during trading on Friday as prices currently trade around $1195. With Gold’s sensitivity to US interest rate hike expectations reaching shocking levels this quarter, more downside could be expected as expectations mount over the Fed raising US rates repeatedly in 2017.
Although risk aversion from the political uncertainty in Europe, Brexit woes and Trump developments could support the metal in the longer term, bears remain in firm control this month.
From a technical standpoint, the zero-yielding metal is firmly bearish on the daily charts and a solid NFP report this afternoon could encourage a steeper decline towards $1190 and potentially lower.
Stanbic IBTC Bank Disowns Lagos ATM Fraudster
Stanbic IBTC Bank PLC has disowned Tope Olajide, 22-year-old fraudster arraigned for theft of customers deposits.
The Bank said this in a statement on Wednesday.
The statement said: “The attention of the management of Stanbic IBTC Bank PLC has been drawn to news currently circulating in the media, about the alleged arraignment of staff of the Bank on charges bordering on the theft of customers deposits.
“The Bank would like to clarify that the defendant, a 22-year-old Tope Olajide, IS NOT, and was at no point in time an employee of Stanbic IBTC Bank PLC.
“The alleged culprit was apprehended around 7:30 am, on Thursday, 27 August 2020, by security operatives after he was exposed by CCTV footage using ATM cards he had allegedly stolen and converted, to make withdrawals from the accounts tied to the stolen ATMs.
“The CCTV footage also showed the alleged culprit pretending to assist customers at ATMs whilst also attempting to fraudulently dispossess the customers of their ATMs.
“He was subsequently arraigned before an Ikeja Magistrate Court on Monday, 14 September, for stealing the debit cards of two customers and using them to unlawfully withdraw the sum of N427,000.
“The Bank would also like to implore members of the public to be security conscious when conducting transactions at ATMs. Customers are advised to report any suspicious actions around them to security operatives who are usually stationed around the Bank’s ATMs, when carrying out transactions at any of our ATM locations.
“As an organisation, we hold dear the values of integrity, and we will continue to prioritise the safety of our customers effectively.”
Buhari Okays Establishment of CBN-Led Infraco
President Muhammadu Buhari has approved the establishment of an Infrastructure Company (Infraco) to be driven by the Central Bank of Nigeria (CBN) in partnership with the African Finance Corporation (AFC) and the Nigerian Sovereign Investment Authority (NSIA).
This is coming on the heels of the foreign reserves’ slump to $36 billion following a cocktail of monetary policy interventions by the apex bank to cushion the scathing effects of the COVID-19 pandemic on the economy.
Mr Godwin Emefiele, CBN governor, made these disclosures in Abuja at the annual conference of the Chartered Institute of Bankers of Nigeria (CIBN) with the theme: Facilitating a Sustainable Future: The role of Banking and Finance.
According to him, Infraco would enable the use of private and public capital to support infrastructure investment that will have a multiplier effect on growth across critical sectors.
“This entity would also be able to raise funds from the capital markets and mobilise long term finance to address some of our infrastructure needs, while providing reasonable returns to investors. “We believe this well-structured fund can act as a catalyst for growth in the medium and the long run. The support of the banking community will be important in achieving this objective.
“A well-built infrastructure system, comprising hard infrastructure such as roads and ports, and soft infrastructure such as broadband penetration, can have a multiplier effect on growth by enabling the expansion of business activities in the country”, he explained.
On foreign reserves, Emefiele attributed its crash to the decline in foreign exchange earnings and subsequent adjustments in the value of the naira to the dollar.
Amana Bank signs Comprehensive Software Deal with Path Solutions
Amana Bank, a leading Islamic bank in Somalia has announced that it has selected iMAL, the AAOIFI-certified core banking platform from Path Solutions to replace its legacy IT system and deploy a single, cloud-based digital banking platform to underpin its banking operations.
This is Path Solutions’ third win in Somalia after Premier Bank and MyBank Ltd. The company went through a lengthy competitive bidding to which all international suppliers were invited, before being selected as Amana Bank’s preferred technology partner.
According to a statement following the signing, Path Solutions will supply and install its flagship Islamic core banking platform iMAL in addition to its comprehensive digital suite at Amana Bank Somalia. The new digital software will provide instant 24/7 service availability with fast, inexpensive, easy and convenient online banking, frictionless payments and transfers, personalization, engagement and retention.
Abdirizak Hussein Malin, Chairman of Amana Bank Somalia commented, “As part of our strategy, Amana Bank has instituted a digital transformation plan that will help us meet the emerging needs of our customers and the increasing demands of innovation.
“Consequently, we required a partner with open and agile technology that will drive powerful change. We have chosen Path Solutions for its ability to deliver vital digital financial solutions at this critical time with its depth of experience supporting Islamic banks in Africa.
“The company has differentiated itself from other vendors in its unique ability to combine core Islamic values with modern digital banking solutions, and to fully comply with Sharia and banking regulations.
“We are confident that the new technology, proven to significantly improve levels of customer fulfilment, will transform our operations by driving incredible efficiency gains while also reducing risk, lowering overall IT costs via higher automation and lower maintenance spending”.
The new iMAL platform leverages artificial intelligence and machine learning to help financial institutions get predictive insights for better data-driven decision making. It will also help strengthen customer loyalty through enhanced security transactions.
“We are delighted to partner with a leading Islamic bank in Somalia on a project that will set a new standard in digital banking for the country. Today, every financial institution has an incredible opportunity to apply advances in cloud computing to redefine every aspect of its business”, said Mohammed Kateeb, Path Solutions’ Group Chairman & CEO.
“Somalia’s Amana Bank is a good example of this transformation to drive innovation forward and ensure much more secure banking experience, enabling customers to enjoy the nuances of non-stop banking with cloud-based services.
The bank will also benefit from the full Islamic coverage which bridges the gap between modern customer requirements and intrinsic Islamic values. Our multi-award winning Islamic core banking platform will support the delivery of innovative digital products that are both Sharia-compliant and specialized for Amana Bank’s retail and corporate customers”.
The new agreement was signed by Amana Bank’s Chairman Abdirizak Hussein Malin and Path Solutions’ Group Chairman & CEO Mohammed Kateeb on Sunday 6 September at Path Solutions’ Dubai office. The implementation will be delivered 100% in the cloud and 100% remotely amidst the COVID-19 lockdown.
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