Some headlines from Africa:
WORLD OIL PRICES : Oil futures extended losses into a third session in Asian trade on Wednesday, as U.S. crude stocks last week surged to more than half a billion barrels and as Iran plans to boost exports from March.
SOUTH AFRICA MARKETS : South African stocks closed lower for a second consecutive day on Tuesday as demand for high-yielding assets declined. The rand also weakened.
KENYA MARKETS : The Kenyan shilling held steady against the dollar on Tuesday while shares eked out meagre gains.
NIGERIA : Nigeria, reeling from the oil price plunge that has slashed vital revenues, has asked the African Development Bank for a $1 billion loan to help fund an increased budget deficit, the AFDB said on Tuesday. Additionally, Nigeria’s central bank told commercial lenders to fund their naira accounts on Tuesday to be able to participate in a currency intervention on the interbank market on Thursday, traders said, citing a message from the regulator.
Yesterday I mentioned that FED member Fischer noted the recent global turmoil will give the FED some reasons to delay hiking rates (in March). Today another member of the FED, Ms George contradicted Fischer and said “While taking a signal from such volatility is warranted, monetary policy cannot respond to every blip in financial markets. The recent bout of volatility is not all that unexpected, nor necessarily worrisome, given that the Fed’s low interest rate and bond-buying policies focused on boosting asset prices as a means of stimulating the real economy.” Looks like we have a good old “war of words”. While I agree with Ms George, I still believe the FED should delay a rate hike until such time the market has calmed somewhat. If you cast your mind back to October when Pres. Yellen delayed hiking citing market turmoil in China, surely one could argue what we are going through now is much of the same. What’s the rush? Rather wait and see. This Friday’s NFP will help the FED to decide, and if the analysts are correct and the number is sub 200k you would think this is reason enough to hold off (January was +290k).
BoJ Kuroda said yesterday the BoJ are ready to reduce rates (currently -0.10%) more if needed. Already reeling from the shock announcement last week, the market is viewing this as a positive sign that the BoJ will do what it necessary to stabilize the Japanese economy. Fighting talk.
GBP continues to rally though I believe this rally to be short lived and on the back of profit taking. The news is out re UK interest rates. I believe over the comings days/weeks we will in all likelihood see a resumption of the sell off in the GBP vs the USD and EUR.
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