|USD/NGN yesterday’s close||424|
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Oil prices erased early losses to trade higher on Wednesday, but gains were limited as market participants remained skeptical producers would reach an agreement to freeze output to rein in a global supply glut.
The ZAR rose as much as 2.5 percent against the dollar to its strongest in more than a week on Tuesday, buoyed by data that showed South Africa’s economy bounced back between April and June after a rocky first quarter. South Africa’s economy grew its most in six quarters between April and June as declines in the rand helped drive strong growth in mining and manufacturing, offering some breathing space to a government riven by internal tensions.
A long-awaited bill reforming Nigeria’s petroleum industry is effectively on hold until tensions ease in the restive Niger Delta region, the country’s oil hub, an influential senator said on Tuesday. Nigeria’s trade deficit narrowed in the second quarter boosted by a currency float in June lifting exports, the national bureau of statistics said on Tuesday, but the rise was not enough to help the economy avoid a recession.
Super Tuesday as the USD got somewhat of a hammering yesterday and continuing into this morning European open climbing above 1.34 (GBPUSD) and 1.12 (EURUSD). GBPEUR unfortunately has not enjoyed the same success and currently trading just above 1.19. I keep saying it, I think the FED will delay hiking rates later this month as data continues to “disappoint”. I do not feel there is any rush to hike rates and it would be in their interests to delay to December and hike 0.50% if data allows. Additionally we will know who is in the White House, Mr or Madam President. I know who I have my money on…the first Madam President to hold the highest office. It will be like coming back home!!
The USD was driven mainly by ISM non-manufacturing index which fell to 51.40 (vs expected 54.50). While the number is not something the FED will be shaking at, it still shows that the US economy is fragile and needs to be dealt with accordingly. There are a number of banks who still think the FED will raise rates in September..while I see their point I am basing my opinion on consistent data which in the words of the FED is dependent. You cannot have 1 month’s good 1 month average 1month bad and think that’s ok to give rise to a rate hike. There has to be consistency and right now I just don’t see it. If the FED do raise rates this month then they are thinking the data is acceptable regardless of being good bad or ugly. But is that sending the market the right message? After all they have said over and over again hiking rates is data dependent. Not to mention the issues facing China, the EU and the UK (Brexit). In other words the coming months and years will be fraught with difficulties and insecurities, so hiking rates now only to have to cut them later on will signal the FED had no evaluated the issues enough…
So as far as I am concerned its business as usual and the EUR and GBP (and other major currency pairs) should enjoy some respite until D-day and the will they won’t they hike day
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