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Nigeria News: Sterling Forex Markets in focus

Nigeria News: Sterling Forex Markets in focus

Nigeria News: The forex markets were mellow during trading on Tuesday with most major arena’s lacking direction as the holiday-season liquidity kicked in charging the sterling.

Forex markets Asian shares wobbled between losses and gains following the tragic events in Germany and Turkey which sparked instances of risk aversion. In Europe, although stocks were uplifted by utilities and telecoms, gains could be limited if Asia’s bearish contagion encourages investors to scatter from riskier assets.

With just a few trading days left until the New Year and Christmas around the corner, Wall Street like other major markets could remain range bound till 2017.

Sterling stumbles lower

The sterling has received a pummeling from the Brexit woes this year and is on target to being the second-worst performer among major forex currency as uncertainty haunts investor attraction.

This year’s ongoing battle of words between financial heavyweights on the Brexit topic has added to the anxiety while hard Brexit concerns continue to encourage sellers to incessantly offload the Pound. With the lack of direction in the UK government’s Brexit stance compounding to the uncertainty, Sterling could be poised for steeper declines moving forward.

While there have been discussions on the Bank of England adopting a hawkish stance amid the rising forex markets inflation, the elevated concerns over the impacts Brexit could have on the UK economy could force the central bank to maintain a cautious approach.

As the year slowly comes to an end the Sterling looks quite vulnerable and a rising Dollar could trigger a sharp selloff on the GBP/USD. From a technical standpoint, the 1.2500 resistance has acted as a strong foundation for bears to send prices lower towards 1.2300.

BoJ ends year upbeat

Forex markets received a pleasant surprise on Tuesday following the Bank of Japan’s more upbeat view of its economy which reinforced expectations of a potential interest rate increase in the New Year. The Yen’s persistent weakness could boost inflation in Japan by elevating import costs and such remains supportive for overall economic growth.

Although the BoJ has ended the year on a positive note, the lurking fears of inflation which is still under the golden 2% target may be a cause for concern in 2017.

Technical traders who have been observing the USDJPY can see the pair is heavily bullish on the daily timeframe. The consistently higher highs and higher lows fulfill the prerequisites of a bullish trend while lagging indicators such as the MACD and 20 moving averages all point to the upside. A decisive breakout above 118.50 could open a path towards 120.00.

By Lukman Otunuga  (FXTM)


Rev Francis Waive

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