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FXTM Analysis: Political Tensions Across Globe, Knock-On Effect On Markets

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FXTM Research Analyst Lukman Otunuga comments on ongoing political tensions across the globe and their knock-on effect on markets.

Ongoing geopolitical tensions across the globe and heightened political risk in Europe have limited appetite for riskier assets this week, with global stocks now on the back foot. Asian share concluded in the red on Wednesday, as the uncertainty from world events left investors on edge.

Although European markets have displayed some resilience by opening higher this morning gains may be capped, especially if anxiety mounts ahead of the French Presidential elections.

With the overall trading mood subdued and participants adopting a cautious stance in this tense environment, Wall Street could struggle to venture higher this week.

Sterling Boosted by Mixed Jobs Report
Sterling received a slight boost on Wednesday, with short bulls in action after the mixed jobs report showed that the UK’s unemployment rate remained steady at 4.7% in the three months to February.

However, the upside was limited, as claimant count increased sharply by 25.5k in March while regular pay rose by a tepid 0.1% after accounting for inflation. With nominal earnings in the United Kingdom slowing to their weakest pace in seven months, consumer spending may be negatively impacted moving forward.

A drop in consumer spending power could reignite concerns over the sustainability of the UK’s consumer-driven economic growth, which may in turn create further headaches for the Bank of England.

Focusing on the foreign exchange outlook, the GBPUSD has staged a sharp rebound, with prices breaking above 1.2500 on the back of Dollar weakness.

The currency pair still remains in a wide range on the daily timeframe, with weakness back below 1.2450 opening a path towards 1.2370. In an alternative scenario, a decisive breakout above 1.2550 will signal an official breakout with bulls targeting 1.2650.

Trump in the Spotlight Again
The heightened geopolitical risks around Syria and North Korea have left markets tense this week and investors on high alert. Participants are in need of clarity on world events this week and as such, may encourage most to focus on Donald Trump’s aired interview on Fox Business Network.

For those who remain somewhat optimistic over Trump’s fiscal policies, the pending interview could provide further insight on the market-shaking tax reforms and infrastructure spending. With Syria and North Korea developments likely to be discussed, this could be labelled as a high-risk event that sparks volatility.

The combination of profit taking, geopolitical concerns and overall uncertainty has exposed the Greenback to downside risks this week.

With short-term bulls still in control amid the expectations of higher US rates, the current Dollar decline could be treated as a technical correction. From a technical standpoint, the daily bullish outlook remains valid as long as the Dollar Index keeps above 100.25.

Commodity spotlight – Gold
The uncomfortable trading atmosphere created from geopolitical tensions and political risk has boosted Gold’s attraction this week, with prices sprinting to five-week highs. This yellow metal is firmly bullish on the daily charts, and further upside may be expected as anxiety accelerates the flight to safety.

From a technical standpoint, prices are trading above the daily 20 SMA, while the MACD has crossed to the upside. Previous resistance at $1260 could transform into a dynamic support that opens a path towards $1280 and potentially higher.


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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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