BoE, BoJ Takes Center Stage as New Fed Chair Emerges this Week

The bulls were all blazing for the dollar all through the prior week. The approval of 2018 budget at the senate signaled renewed drive towards the achievement of President Trump's tax reforms before the end of the year. This together with speculations surrounding who to assume the position of the next Fed head had the dollar on an upward reel. Announcement of the new Fed chair along with the US major jobs data (non-farm payroll) comes in on Nov 3rd, while a FOMC meeting will hold on Nov 2nd. The FOMC meeting won't be eventful as rates are not expected to go up till December. Jerome Powell seems to be favoured as the next Fed Chair, this may not seat well with investors as their eyes are set on John Taylor who is more on the hawkish side.

Analysts have forecasted a rise in non-farm payroll to 311,000 following the drop to 33,000 the prior month. All of these will weigh heavily on the performance of the dollar in the coming week.

European Central Bank's decision to cut down its Asset Purchase Program (APP) by half and at the same time suggesting it will come to the market's aid if there be signs of a reversal effect on the Euro-area's economy sent the Euro on a downward spiral as investors perceived it as dovish. The Euro sank to record low of 1.1609 against the dollar. The new week is laced with final manufacturing PMI from all across Europe. 8am today will see the release of Germany's retail sales & m/m CPI numbers, Spain will also release its y/y CPI & q/q GDP by 9am, this should set the tone for the EURO as the week commences.

Spain in the course of the weekend implemented article 155 on Catalonia, taking over all forms of authority and setting Dec 21 as the date for elections in the region. This comes after the region's autonomous authority declared Independence. The Spanish government is now in charge of the region's police force and civil service. Spanish prosecutors meanwhile plan to start pressing rebellion charges against Carles Puigdemont and his ousted government, these charges carry a 30 year jail term. The problem remains internal but heightened tensions will not go well for the Euro.

GBP has a busy week ahead with different economic data due for release. All eyes will be on the Bank of England's meeting scheduled to hold on Thursday. This would definitely take the Shine off the FOMC meeting as policymakers are divided on whether or not there should be a rate hike. A rise in UK's inflation to 3%, 1% above the apex bank's inflation target advances the case for a rate hike but low consumer spending as shown in recent economic data signals a rate hike might be a little premature.

News coming in the course of the weekend notes the EU is shifting focus away from Brexit to concentrate on more pertinent issues coming up in 2019, such as the European Parliament's elections. This is considered a positive for Brexit as it will make it politically easier for the assembly to approve any deal on the terms of Brexit.

Aussie, Kiwi & Loonie all bowed to the power of the dollar in the past week. Unimpressive jobs data from Australia, investor’s low confidence in New Zealand's new government and dovish stance of the Bank of Canada had all three currencies in investor’s black book. Australia's trade balance, retail sales & China's manufacturing data if positive could change investor's sentiment towards the AUD. Employment data from Canada and New Zealand are economic data on investors mind for both currencies this week. Indications of an improving labour market in New Zealand may give support to the NZD in the course of the week.

The Bank of Japan (BoJ) will also take center stage this week. Expectations are that it will continue with its economic expansionary stance as inflation is still below 1% giving life to threats of deflation. Retail sales released during the Asian trading session improved to 2.2% but dropped 0.1 percentage points below analyst forecast. The Yen will remain weaker against other currencies given policy divergence even as the Japanese economy gains momentum.

The Asian trading session was uneventful given low volumes in the market.

Gold prices remained below 1,300 as dollars gained momentum in the prior week, while Brent crude reached a high of $60 as OPEC plans to extend oil production cut beyond March 2018 with backing from Saudi-Arabia and Russia.

Oando Contests Suspension in Court, Faults SEC’s Decision

The management of Oando PLC on Tuesday said it had obtained an order of court restraining the Nigerian Stock Exchange, NSE, from placing its shares on technical suspension.

A statement signed by the oil firm’s spokesperson, Alero Balogun, and the Chief Compliance Officer, Ayotola Jagun, on Tuesday faulted the decision of the Securities and Exchange Commission, SEC, and the NSE.

The NSE had last week suspended trading on the shares of the oil firm.

The bourse said it was acting on the directive of the SEC.

On Monday, the bourse relaxed its sanction and placed the company’s shares on technical suspension, saying trading on its shares will not affect prices.

But Oando in its statement Tuesday evening said that on Monday it obtained an ex-parte order from the Federal High Court granting an interim injunction “…restraining the NSE and any other party working on their behalf from giving effect to the directive of the SEC to implement a technical suspension of the shares of the company pending the hearing and determination of the motion for injunction.”

The company also said it obtained a court order restraining the SEC from conducting an audit into its finances pending the hearing of the motion.

The statement said that the notice had been served to the regulatory bodies on Tuesday, adding that the bodies are expected to comply henceforth.

Similarly, the firm said it took its decision because the SEC acted without having concrete evidences, noting that it concluded without thorough investigations.

The statement also condemned the regulatory body’s decision to audit expenses in the company’s books saying it was not in the best interest of shareholders.

The Dollar Dominates the Market

The strength of the dollar was retained in Thursday's trading, news of Janet Yellen being out of the raise for Fed Chair sat well with investors. Candidates for the position of the Fed Chair have now been narrowed down to Jerome Powell and John Taylor. Advance GDP q/q will be released later today, analyst forecast show 2.6% rise. US economic data is quite strong with preliminary GDP at 3% and employment nearing full capacity. All this fuels the likelihood of an interest rate hike despite soft inflation numbers. The US is the first to end Quantitative Easing (QE) with the cleaning up of its balance sheet starting in October 2017. The Asian session saw a continuation of the currency's dominance of all other currency pairs. All eyes will be on advance GDP later today.

ECB's highly anticipated meeting threw the Euro into a downward spiral. The currency has lost 1.55% against the US dollar as at the time of writing. The ECB as expected cut down on its asset purchase by half (from 60bn Euro to 30bn Euro) but extended its stimulus program by 9 months. ECB governor Mario Draghi noted that interest rate will be unchanged till the end of the stimulus program, the ECB also noted that "if the outlook becomes less favorable, or if financial conditions become inconsistent with further progress towards a sustained adjustment in the path of inflation, the Governing Council stands ready to increase the Asset Purchase Program in terms of size and/or duration." Though the stimulus extension was anticipated, investors were uncomfortable with the accompanying statement hence, the fall of the Euro. Though there seems to be no major economic data coming out of the Euro-area today, the coming week will see the release of CPI numbers across Europe.

The British Pounds had a disappointing show on Thursday as poor CBI Realized Sales together with strong economic data coming out of the US changed investors sentiment towards the pound. GBP/USD fell to 1.3123 as at the time of writing. The CBI Realized Sales (a leading indicator of consumers spending) fell to -36 points (the sharpest drop since March 2009) from 42 points in September. High inflation seems to be taking its toll on consumer spending a key driver of economic growth. In its November 2nd meeting, the Bank of England must decide whether or not to increase interest rate for the first time in 10years. Policymakers are divided on this decision, proponents are pointing to the 3% inflation which is higher than the Bank's 2% target inflation, while opponents argue that the economy is showing signs of weakness and a rate hike could curtail economic growth. No major economic data is expected from the UK today.

  

Dovish stance of the Bank of Canada (BoC) coupled with a strong dollar left the loonie in doldrums as USD/CAD traded at 1.2864 during the Asian trading session. The Australian dollar didn't fair any better against the dollar it slipped to 0.7635 early Friday. Q/Q Producers Price Index released earlyFriday morning fell to 0.2% from 0.5% the prior period, way below analyst 0.4% forecast. Trading activities on both currencies will be determined by US advance GDP, positive q/q GDP from the US will push both currencies further down.

Gold continues to trade below the 1,300 psychological levels given the yellow metal's negative correlation with the dollar. Brent crude however rose to $59.43 as Saudi and Russia gives their backing to an extension of production cut beyond March 2018. The extension should be confirmed at OPEC's meeting next month. A confirmation will see oil prices rally.

AUSSIE TAKES A BOW

Unimpressive CPI numbers from Australia saw the Aussie take a bow against the US dollar during the Asian session. The numbers which were short of analyst expectations saw AUD/USD fall to 0.7736 losing 0.54%. The Reserve Bank of Australia (RBA) has remained dovish on the back of high household debt and low wage growth. Soft CPI numbers fuels the RBA's dovish stance. Hence, investor’s sentiment towards AUD/USD tilts towards the bearish side.

The US dollar remains firm as President Trump's tax plan looks on the way to meet a December deadline, Trump met with the Republican senators to discuss the proposed tax cut on Tuesday. The dollar traded flat against most of its other pairs during the Asian session, USD/JPY however dipped during the session. We suspect a bit of retracement might be taking place as the pair has been on a bullish ride for a while. Investors patiently await the president's choice of the Fed Chair given the effect this would have of monetary policy and the strength of the dollar. Most economists are of the view that monetary policy will be largely driven by the performance of the US economy. However, despite low inflation, odds of an interest rate hike in December stands at 96% according to CME FedWatch. Core durable goods and durable goods order are data to look out for from the US today.

The Japanese Yen fell against the dollar at the release of the country's manufacturing PMI. The index dropped to 52.5 from the prior month's 52.9 falling short of analyst forecast of 53.1. Though manufacturing seems to have slowed in October, it is the 14th straight month of expansionary reading. Prime Minister Shinzo Abe's election win will see the country continue with its economic stimulus until inflation gets to the Bank of Japan's (BoJ) 2% target. Bloomberg quoting unnamed sources noted that the BoJ intends to downgrade its inflation forecast in its quarterly report expected next week. From latest forecast, BoJ estimate core CPI to rise 1.1% for the fiscal year ending in March 2018. Y/Y CPI numbers are expected later this week.

Investors continue to stand on the sidelines watching the Euro in expectation of the ECB meeting in Thursday. Positive flash PMI numbers fuels the ECB's tapering plans as the Central Bank has maintained loose monetary policy to spur the economy of the Euro-area. Markit noted that "firms don't appear to have been unduly affected by recent euro strength, with growth of new export orders accelerating in October." And, "healthy demand in export markets appears to be outweighing any negative currency impacts." Investors expect the ECB to announce its reduction of asset purchase at its meeting on Thursday given the return to growth of EU economies. The Euro was mostly flat against the dollar during the Asian session.

The British Pounds experienced a bit of a sell down dropping to 1.3118 against the dollar in Tuesday's trading. GBP/USD was flat all through the Asian session. BoE Deputy Governor Jon Cunliffe warned that the economy has "clearly slowed" this year. That's due to "the squeeze we have seen on real incomes and imported inflation from the depreciation [sterling] that has come in. And pay has remained relatively subdued." He pointed out that interest rates "will not need to go up by as far and as fast as they did before the crisis". Still, "over the forecast period of three years rates will need to rise".

He however, emphasized that the exact timing of rate hike is "a more open question". Prelim q/q GDP numbers are expected later this morning, analyst have forecasted a 0.3% growth same as the prior period.

The Bank of Canada's monetary policy meeting comes up today. The Bank which has raised rates twice this year will most likely retain its current rates on the back of soft economic data. USD/CAD traded in favor of the USD during Tuesday's trade but stayed flat during the Asian session. A dovish monetary policy minutes will see the loonie fall against the dollar.

Kiwi Dollar remains in doldrums as investors are uncomfortable with the policies of the new coalition government. NZD/USD continues to trade low, now down to 0.6892. New Zealand's trade balance is expected later today. Positive economic news from the US will keep NZD/USD on a downward spiral as investor’s sentiment remains negative on NZD.

Gold prices have steadied this week, after the metal slipped 1.9 percent last week. Investor risk appetite increased feeding off positive employment, manufacturing and housing data from the US beating estimates. The Asian session saw a drop in the yellow metal to $1,274. Brent crude stood at $58.38 up 0.09% as at the time of writing.

Abe Takes the Shine

Japanese Yen takes the spot light as snap elections are on going. Exit polls show a supermajority win for incumbent Prime Minister Shinzo Abe. Abe’s Liberal Democratic Party and coalition partner Komeito are set to win between 281 and 336 seats of the 465 total, boosting Abe's chances of becoming Japan's longest serving political leader. Investors see an Abe win as a downer for the JPY, it would mean a continuation of on going fiscal stimulus to lift the Japanese economy from deflation. USD/JPY closed the prior week on a high note reaching $113.49 at the end of trading on Friday. Investors are set to continue the bullish run on USD/JPY, if PM Shinzo Abe returns to power.

The US dollar ended the prior week on a positive note with the Senate's approval of 2018 budget, clearing a significant hurdle and moving the GOP closer to tax reform.  This together with a higher than forecasted existing home sales data released on Friday, retained investor's positive sentiment on the USD. Keen on investors mind is who takes the position of the next Fed Chair. News from the US says Jerome Powell, John Taylor and Janet Yellen are President Trump's top three nominees. The president will announce his choice on the 3rd of November 2017, the present Fed Chair's tenure will end February 2018. This week will see the release of advance q/q GDP, analyst forecast a q/q GDP of 1.8%.

Spain continues to battle the Catalonia region. Prime Minister Rajoy on Saturday noted that Spain will dismiss Catalan President Carles Puigdemont and his government and take control of the regional police force and public television and radio channels as part of a barrage of measures that could be ratified by the Senate within a week. The crisis seems of no effect on the Euro but heightened tensions could change investor's sentiment.

ECB's much anticipated October 26th meeting comes up this week. Plans on it bond-buying for 2018 will be laid out. Expectations are that the Central Bank will maintain the large size of its balance sheet through reinvestments of it maturing bond. The Euro had the bears in domination for most part of the prior week. The weekly chart shows the currency closed at 1.778 against the dollar. Flash PMI across the manufacturing and services sectors are expected the coming week.

The British pound continues its battle against Brexit. Though the pound closed higher against the dollar in Friday's trading, 'Brexit Deadlock' negotiations trailed it for most part of the prior week. PM Theresa May appearing before EU leaders on Friday made some headway with EU leaders assuring her of resuming trade talks as soon as they are clear on UK's fulfilment of its financial obligations to the EU. UK's Prelim q/q GDP is expected in the course of the new week as investors keep a close eye on how the British parliament handles its exit of the European Union.

The Canadian dollar took a beating on Friday on the back of soft CPI and retail sales numbers. The Bank of Canada which has hiked rates twice this year is expected to meet on the 25th of October. Investors anticipate no rate hike given soft economic data. Hence, the bullish run on USD/CAD is expected to continue in the new week.

The Australian dollar had a positive week with higher than expected employment data and positive economic data from China. The Aussie is however positioned to loose the most from a stronger dollar and a hawkish Fed. Higher US bond yields and a nod to Fed Chair Nominee John Taylor will knock off the AUD against the dollar. Australia's q/q CPI is expected in the course of the week.

The kiwi dollar suffered from a Labour party win in the course of the week. New Zealand First announcement of its coalition with Labour party ticked off investors and triggered a sell down on NZD. Investors are uncomfortable with the Labour party in power as it is opined to be inexperienced. The National party succeeded in returning the economy to a budget surplus and maintaining economic growth for 8 consecutive years. The Labour party will be introducing new immigration laws and making significant changes to the RBNZ. The sell down on the kiwi will most likely continue in the new week.

Dollar Rides on US Senate 2018 Budget Approval

The US dollar rode the market during the Asian section, gaining against every other major currency. The dollar is feeding off news that the US Senate has adopted the 2018 Budget hence, gives room for speeding up consideration of President Donald Trump’s plan to enact tax cuts. The final approval of the budget unlocks a special procedure which allows Republican to pass a tax code rewrite without Democratic support.

Data from the US on Thursday showed decline in unemployment claims and a rise in Philly Manufacturing index. Friday will see the release of existing home sales which analyst forecast will drop to 5.30m from 5.35m.

The announcement of a coalition government between the Labour party and New Zealand First turned investors against the kiwi on Thursday. Citizens on September 23rd 2017 had voted an hung parliament with the ruling National party winning 56 seats and a Jacinda Ardern led Labour party won 46 seats, both falling short of the 61 needed to hold the reins of power. With 9 seats, New Zealand First held the balance of power, its decision on who to form a coalition with will determine who became prime minister. Winston Peter leader of New Zealand first on Thursday noted that regional development, addressing the infrastructure deficit and improving the lives of New Zealand’s most vulnerable people, would be priorities for the new government. Investors had anticipated a coalition government between the National party and New Zealand first which they were more comfortable with as the incumbent had returned the economy to a budget surplus and maintained economic growth for 8 years. The Labour party has promised to ruffle feathers with its immigration restrictions and changes it intends making to the Reserve bank of New Zealand if voted into power. The NZD plunged to 0.7030 from 0.7156.

The New Zealand economy thrives on its robust tourism sector, m/m visitor arrivals in New Zealand released on Thursday evening, showed 0.3% rise, while credit card spending showed a drop to 4.9% as released early Friday morning.

The Euro stayed unaffected by the tension brewing in Catalonia, as Carles Puigdemont ignored Prime Minister Rajoy's ultimatum. The prime minister awaits the senate's approval to invoke article 155 on Catalonia. The Euro continued its upward movement as EUR/USD rose to 1.185 with no major economic data released from the Euro-area on Thursday. Germany's PPI and the Euro-area's final current account are data to look for today. The coming week will be laced with flash PMI numbers for the Euro-area. Investors seem to be viewing the Catalan crisis as an internal problem in Spain, an opinion that might change if the article 155 is approved.

EU leaders started a two day meeting in Brussels on Thursday. The meeting which was supposed to focus on Brexit is moving past that as Britain seems confused at the moment. The meeting will now focus on the Catalan crisis, the Iranian nuclear agreement and deepen integration among EU members.

The British Pounds traded lower on Thursday against the dollar as GBP/USD fell to 1.3150. This is a spin-off from a 0.8% decline in retail sales in Britain in September erasing all the gains made the prior month. Retail sales dipped on the back of higher cost, the senior statistician noted that increased costs are reflected in the more rapid growth in the amount spent when compared with the quantity bought. Consumers in the UK are feeling the heat as inflation is well above wage growth, if inflation is taken into account wages actually dipped by 0.4% y/y. Imports have become more expensive on the back of a weaker pound. CPI in Britain at the moment is 3% well above the BoE's target inflation. Though the BoE remains positive on interest rate hike, soft economic data might force the apex bank to reconsider.

The Aussie got propped up on Thursday given positive employment data and growth in the Chinese economy. The AUD feeds off positive news from China given Australia's export relationship with China. Though Q3 GDP dropped to 6.8% as forecasted, industrial production jumped to 6.6% from 6% the prior period. According to the IMF, Asia accounts for 63.3% of the world's economic growth. Chinese president Xi Jinping at the twice a decade communist party congress noted that China accounts for 30% of global growth. The People's Bank of China's governor Zhou Xiaochuan has forecasted a 7% growth in GDP in the second half of the year.

The Canadian dollar has the floor today m/m CPI and core retail sales are to be released later in the day. The loonie traded flat against the dollar for most part of Thursday, after riding on the wave of a 1.6% rise in manufacturing sales on Wednesday which stalled a decline streak.

Gold reversed losses from three trade session on Thursday climbing as high as 1,290. The yellow metal however edged lower during the Asian session on the back of positive USD news. Brent crude closed 0.02% higher at $57.24.

Brexit Deadlock Holds Down GBP

Shopping for a new Fed chair is under way, as news coming from the US reports Mr Taylor John had an impressive interview last week with president Trump. This drove the dollar northward, as Taylor John is known for policy rules in line with higher interest rates. The dollar gained momentum, as Investors opine a Taylor led Fed would raise interest rate early 2018. The present Chairperson of the Fed Janet Yellen is expected to hold her interview with the president later this week, as her tenure ends February 2018. The dollar gained with GBP/USD falling to 1.3154 from 1.3268. Housing starts and building permits are the two major economic indicators on the dollar's calendar today. Both of which are not looking so good in terms of analyst forecast, this gives life to the notion that the rise in the dollar will be short-lived.

Despite a Consumer Price Index (CPI) of 3%, the British Pounds couldn't hold its own against other major currencies as GBP/USD shed 0.58% to trade at 1.3154. CPI, the primary gauge of consumer spending, rose to 3% y/y given the effect of a weaker pound on imports. The currency has shed 12% since the Brexit Referendum in June 2016. The rise in CPI gives support to the BoE's plan of a rate hike in November. The BoE governor testifying before the Treasury Select Committee in London on Tuesday noted he expected inflation would peak in October or November, and that the bank had refrained from acting earlier to raise rates in order to lower inflation, saying that high inflation was a "trade-off" in order to hamper the economy.

The decline in the pound comes on the back of the Brexit talks deadlock. Theresa May is pushing for trade talks with the EU, but the EU won't talk trade with the UK until conclusions are reached on Britain's payment when it leaves the European Union, the status of the border with Northern Ireland and the jurisdiction of the European High Court on European citizens living in the UK. The EU could hold off trade talk with the UK till 2018. The BoE governor noted that the Bank has made contingency plans in case no agreement is reached between both parties. British businesses are however soliciting for an agreement, and want a 2-year interim period, such as a temporary customs union with the EU, in order to soften the blow of leaving the EU. Data on wage growth and unemployment are expected by 9:30am Wednesday.

The Euro traded a little lower on Tuesday on the back of lower than expected German ZEW economic sentiment report. The report which is an indicator of investors/analyst sentiment on the economy in coming months didn't reflect the present boom in the German economy, falling 2.5 points short of analyst expectations to 17.6. Final CPI for the Euro-area was in line with expectations while, the ZEW economic sentiment for the whole of Europe was also 7.5 points below analyst expectations to 26.7. Focus will be on ECB President Mario Draghi's speech at the ECB conference in Frankfurt 9:10am Wednesday.

The drama continues in Southwestern Europe as Carles Puigdemont refuses to state an outright 'Yes' or 'No' on Catalonia Independence. Spanish Prime Minister Mariano Rajoy has given till Thursday for a clear answer on Catalonia's Independence; else, Article 155 of the Spanish Constitution will be exercised. This spells doom for Carles Puigdemont as the exercise of Article 155 implies an end to the Catalan Parliament. A significant number of companies are leaving Catalonia for other parts of Spain and S&P noted the region could face a recession if it declares Independence. Though the Euro seems unaffected by this drama at the moment, the effect of increased tension in Catalonia on Spain (the Euro-area's fourth largest economy) would weigh heavily on the Euro.

The loonie edged lower against the dollar in Tuesday's trade. M/M manufacturing sales are expected from Canada on Wednesday. Donald Trump's take on the North American Free Trade Agreement (NAFTA) does no good to the Canadian economy. The regional agreement has been up for debate between the three parties involved (US, Canada & Mexico) with no conclusive agreement reached. The US President has threatened to scrap the agreement and sign a new one with Canada. Should he make true his threat, the Canadian dollar has been forecasted to dip by 10% by the Bank of Canada. The Canadian dollar could feed off the fight between Iraq and Kurdistan, as rising oil prices is in favor of the Canadian economy.

The Australian dollar, early Tuesday traded lower against the dollar on the back of dovish monetary policy stance but gained momentum later in the day. Data coming from the country early Wednesday shows Melbourne Institute index turned positive to 0.1% from negative 0.1% the prior period. Employment data from the country & Chinese GDP numbers are expected tomorrow, both economic indices will impact the direction of the AUD. Most importantly the Chinese government’s twice a decade party congress on Friday is to look out for. Early hours trading shows slight gains for the AUD moving from a low of 0.7841 to 0.7857 against the dollar.

Gold permuted on the back of its negative correlation with the dollar. The metal which was back above 1,300 as at Friday fell to 1,284.70. News on Taylor John as favorite for Fed Chair, gave the dollar a boost hence, permuting gold. Heightened tensions in Spain later in the week could shoot Gold back up as it is considered a safe haven in times of uncertainty/volatility. Oil prices continued northward following Iraqi-Kurdish fight. On Tuesday, the Iraqi army occupied the city of Kirkuk, which is located in an oil-rich region. Continued fights in oil rich regions raises oil prices, brent crude stood at $58.27 rising 0.67%.

Catalonia, Austrian Elections and German Coalition Talks Trails the Euro

The GBP was first in line for the release of economic data for the week. Rightmove Housing Permit Index (HPI) showed improvement as it rose to 1.1% in October from -1.2% the prior month. This signals investors’ appetite for buying houses in the UK is growing given lower prices, a spin off from the uncertainty generated by Brexit. It is pertinent to note that the Sterling performed best amongst its pairs in the prior week. This comes on the back of the news that the EU could give a 2 year Brexit extension to UK under the conditions that the latter will fulfill all obligations as a member country, however, UK will be required to give up its voting rights. It was reported that the draft paper submitted by European Council President Donald Tusk indicates that talks on free trade could start as soon as December. This redeemed the pound from the sell off brought about by Brexit negotiations deadlock. During the Asian section today, the GBP traded flat against the dollar on the back of low volumes. We expect the GBP will have a noiseless day, the release of CPI and PPI numbers will shake up the currency.

AUD was headed south against the dollar during the first 4 hours of trading despite positive data coming from China during the section. Usually AUD feeds off positive news from China given Australia’s strong trade relations with the Asian giant. China's Consumer Price Index (CPI) was in line with analyst expectations rising 1.6% y/y while Producer Price Index (PPI) surpassed forecast by 0.6 percentage points, rising to 6.9% in September. The People’s Bank of China Governor Zhou Xiaochuan, at a seminar in Washington on Sunday, however highlighted huge corporate debt as a challenge. S & P recently downgraded China to A+ on the back of its huge debt profile. Though Monetary Policy minutes from the Reserve Bank of Australia will come in tomorrow it is expected to be uneventful given the effect of low wage rate growth and high level of household debt on interest rate. GDP numbers from China later this week will however impact the AUD more. Analysts expect a 6.8% rise in China's GDP, while People’s Bank of China Governor Zhou Xiaochuan has predicted a 7% rise in GDP.

The dollar suffered a big sell off last week on the back of dovish FOMC minutes and soft CPI numbers. It dropped to 1.247 against the Canadian dollar, also trading low against the Australian dollar to close at 0.789 the prior week. Though expectations of a rate hike for December still holds as reiterated by the Fed's head, Janet Yellen on Sunday, it is dependent on economic data to be released before December. The dollar's week will be trailed with volatility given the decertifying of the Iranian deal by President Trump and the continued face off with North Korea.

The Euro shone the prior week as Catalonia eased its reins on declaring Independence hence, putting investors at ease. The currency gained over a 100pips rising to 1.188 against the dollar. But investor's breathe will be held on the Euro till 10am this morning, when Catalonian president Carles Puigdemont is expected to give a clear yes or no to the declaration of Independence to the Spanish government. Catalan television station TV3, which is controlled by the regional government, said Puigdemont will not give Rajoy (the Spanish Prime Minister) a clear ‘Yes’ or ‘No.’

This may result in tensions in Catalonia as the Spanish government is ready to sideline the authorities in Catalonia and take over the administration of the region if independence is declared. Elections results in Austria which is tilting in favour of the Freedom Party and coalition talks in Germany will weigh heavily on the Euro this week.

In other news, New Zealand's CPI q/q data will be released later in the day. Analyst forecast show a 0.4% rise. While Canadian m/m CPI data is expected later in the week.

On the commodities side, Gold rebounded in the prior week trading above the 1.300 psychological level. This comes on the back of the volatility in the market in the course of the week, as the yellow metal is seen as a safe haven. Continued sell off on the dollar will aid Gold's upward trend. OPEC remains bullish on oil demand, predicting a healthy growth of crude demand over the next 5 years. Iraqi forces however moved to take over oil fields in the northern city of Kirkuk from Kurdish forces on Sunday, pushing up crude prices amid reports of deadly clashes. Brent Crude stood at $57.81 rising by 1.12%.

China Sneezes Aussie Catches A Cold

Caixin Services PMI, an index that captures both services & manufacturing performance of China declined in September to 50.6. The release of this index saw the Australian dollar plunge to 0.7751 (as at the time of writing) this comes on the back of Australia being a major source of raw material export to China. Lower client demand and marginal rise in input cost dragged down the index in September. The index which showed China's Services sector grew the weakest in 21 months in September just might be reflecting the Chinese economy in the 4th quarter of the year. The bearish sentiment on AUD will most likely be retained for the rest of the day as the bank holidays in US, Canada & Japan has pared volumes.

The Euro area was awash with positivity as the German Industrial Production and Sentix Investors Confidence indices both showed significant growth. The German Industrial Production index turned positive, beating analyst expectations by 1.7 to 2.6, while the Sentix Investors Confidence index which is an opinion poll of analyst & investors on their outlook of the economy, rose to 29.7 from 28.2 in August. This signals the German economy is moving past the Bundestag hung election results and investors are bullish about the performance of the Eurozone economy in the coming months. This notwithstanding the Euro traded flat for most part of the day ranging between 1.1728 & 1.1755 as the US, Canada & Japan are on a bank holiday.

The Kiwi traded flat for most of the day, closing at 0.7063 which is just 2 pips higher than its open price. New Zealand's final election results were made public on Saturday and the result showed no clear winner. Majority of the votes were divided between the two most prominent parties the National and Labour party. At the final count, National had 56 seats while, Labour held 46. This means both major parties would have to seek a coalition with other political parties. The next best party, New Zealand First with 9 seats has hinted that it would announce which party to form a coalition government with on the 12th of October 2017. Analysts are of the opinion that New Zealand First will settle with National Party given its conservative ideology. Investors are uncomfortable with a Labour party win as Labour leader Jacinda Ardern has promised to ruffle feathers with her immigration policy and monetary policy change.

US negotiations with North Korea seem a waste as Kim Jong Un has threatened to test missiles reaching the US' west coast. This led to a free fall of the dollar at market opened on Sunday losing gains from the release of non-farm payroll data. The US army is getting ready for a war with North Korea. This will put a lot of pressure on the dollar in the coming days and a rise in safe havens like the Yen and Gold.

On the energy side of things, Saudi Arabia's oil company, Aramco announced it would be cutting its oil supply by 569,000 barrels a day in November despite high customer demand. This is the deepest cut in its history. This shows the countries commitment to getting oil prices back on a bullish run. At the announcement, Brent crude erased declines to trade marginally higher at $55.62 per barrel.

Gold returned to the greens after the doldrums recorded the prior week. It rose to 1,275.24 from its close price of 1,260.51 the week before, as the news of North Korea's planned missile test in US stirred volatility. The yellow metal since falling from the psychological 1.300 three weeks back has been on a downward spiral, continued volatility in the market will keep Gold in the greens.

Foreign Investors Pick Consumer Goods, Financial Services as Attractive Investment Sectors

The Nigerian economy is seemingly on the upturn and remains an attractive destination for foreign investors, seeking sustainable growth opportunities within the continent, according to findings by KPMG.

The consumer goods, financial services, telecommunication, media and technology, oil and gas sectors accounts for about 80 per cent of recent inbound investments into the country, the professional services firm stated in its report entitled: “Doing Deals in Nigeria – Key Insights from Deal Makers.”

The report was the result of a survey of 50 senior business executives based outside of Nigeria, who had attempted, at least one, inbound acquisition in Nigeria in the last four years.

About 62 per cent of the respondents were from five countries – South Africa -accounting for the largest percentage (20 per cent); closely followed by United Kingdom (18 per cent) and United States (12 per cent).

Other notable countries with interest were France (six per cent) and Netherlands (six per cent). The survey showed that 62 per cent of the respondents surveyed, would consider an acquisition in Nigeria over the next two years, while 86 per cent of respondents indicated that they would more likely invest in Nigeria again.

The report further noted that the key drivers for Nigerian acquisitions by foreign investors included the target’s customer base and domestic distribution channels and the opportunity for the investor to restructure the businesses to create further value.
The ability of global corporates and private equity firms to use Nigeria as a base for expansion across West Africa further raises the country’s investment destination profile.

The Partner and Africa Head, Deal Advisory and Private Equity, KPMG in Nigeria, Dapo Okubadejo said: “Our key objective in conducting the survey for this report was to hear first-hand from foreign investors.
“The survey report shares the contributors’ unique insights and perspectives on their deal-making experiences in Nigeria, providing a direct credible feedback to potential investors on the true potential of Nigeria and what to expect in doing deals.

“The report also identifies the key sectors, deal dynamics, leading practices and recognises challenges in doing deals in Nigeria.”
Despite the general positive tone to the report, respondents, however, noted some critical challenges to deal making in Nigeria.

According to the report, key amongst the challenges to investing in Nigeria include: political trends (76 per cent); lack of information/transparency on the target companies (74 per cent), challenging compliance requirements (66 per cent) and the lack of physical infrastructure in the country (50 per cent). It noted that the lack of physical infrastructure in the country was the most important of all perceived challenges to investing in Nigeria.

“This challenge further buttresses the attractiveness of companies with effective distribution channels and route-to-market infrastructure as acquisition targets,” it added.

The report also noted the leading practices for successful deals in Nigeria, top of which was the need to engage the right local advisers with the right relationships and understanding of cultural nuances, considering that about 70 per cent of the deals are with privately-owned businesses with bilateral ‘off-market’ negotiations.

Speaking on the implications of the survey findings, Okubadejo said, “We sincerely hope that the findings in this report will contribute to Nigeria’s policy direction, with regards to foreign investments.”

Flour Mills Renews Plans to Raise N70bn

Flour Mills of Nigeria (FMN) Plc on Tuesday said it would commence process of raising additional capital through Rights Issue and Medium Term Notes(MTN).
Following the high bank charges FMN was paying on borrowings, which drove costs of finance upwards for many years, shareholders of the company, in 2015 authorised the directors to raise up to N40billion of additional equity via a Rights Issue.

However, the directors in July 2016 put the right issue on hold and planned to later raise the funds in three tranches. According to the directors, given the economic headwinds, they decided to undertake the Rights Issue through a Shelf programme (a situation whereby securities are sold over a period of time) to enable the company raise the required funds in several transactions over three year period.

The directors said they have already registered a N40 billion Shelf Programme with the Securities and Exchange Commission (SEC), adding that they would continue to assess the economic climate to determine the most appropriate time to launch the first tranche.

However, in a notification to the Nigerian Stock Exchange (NSE), yesterday, FMN said it would commence with the activities to raise the funds through the Rights Issue and MTN.
According to the company, plans are now in progress towards the possibility of commencing with the first tranche of through the Rights Issue. However, the company said the exact amount to be raised in the first tranche would be confirmed in due course.

Additionally, the company has also revealed plans to raise up to N70 billion through MTN. The company affirmed that it has commenced discussions with stakeholders such as financial advisers, legal advisers and issuing houses to determine the right time and cost for issuing such financial instruments which will eventually be duly registered with proper financial bodies.
Meanwhile, NSE All-Share Index climbed 1.41 per cent on Monday to hit a six-week high at 36,831.93 after its biggest listed firm Dangote Cement and some consumer goods companies gained.

The main share index rose for the fourth straight day on Monday to near 37,000 points, a level it last reached in August. According to market operators, foreign investors and pension funds have been buying shares since September ahead of third quarter earning season due to start this month.
A total of 27 stocks appreciated as against 22 stocks that depreciated. May & Baker Nigeria Plc led the gainers with 7.6 per cent, trailed by International Breweries Plc and Sterling Bank Plc with 5.0 per cent apiece. Total Nigeria Plc and FMN chalked up 4.9 per cent each.

United Capital Releases 9 Months 2017 Financials

United Capital in its usual trend, blazed the trail for the release of 9 months 2017 financials. The result showed a 10% rise in revenue to N6bn, investment income rose by 60% to N1bn while operating income improved by 7% to N5bn in the period. A 36% rise in operating expense saw the group's pre-tax profit slide by 2% to N3.8bn, lower income tax in the period however boosted after-tax income by 3% to N3.2bn.

Balance sheet numbers showed a 69% rise in fixed assets, financial assets fell by 12% to N118bn. Funds under management declined 13% to N88bn while financial liabilities shot up by 14% to N40bn. The group's net assets stood at N15bn at the end of period, rising by 7%. View details of the result below.

Income Statement	9 Months 2017	9 Months 2016	% Change
Revenue (mn)	6,238	5,689	10%
Investment Income (mn)	1,099	688	60%
Operating Income (mn)	5,476	5,132	7%
Operating Expense (mn)	2,341	1,727	36%
PBT (mn)	3,897	3,963	-2%
TAX Expense/Credit  (mn)	624	793	-21%
PAT (mn)	3,274	3,170	3%
Balance Sheet	9 Months 2017	FY 2016	% Change
Fixed Assets (mn)	289	171	69%
Total Assets (mn)	151,944	160,693	-5%
Financial Asset (mn)	118,481	134,050	-12%
Managed Funds(mn)	87,690	100,679	-13%
Financial Liabilities (mn)	39,599	34,833	14%
Total Liabilities (mn)	136,715	146,455	-7%
Net Assets (mn)	15,229	14,238	7%

Dangote Cement Withdraws Interest from PPC Aquisition

On the 6th of October Dangote Cement announced its withdrawal of interest in the acquisition of the entire share capital of PPC Limited a South Africa Cement Company.

The Company in a statement sent to the Nigerian Stock Exchange noted that its Board of Directors formally notified the Board of Directors of PPC that it no longer had an interest in acquiring the entire share capital of PPC Ltd.

Dangote Cement had earlier on in September 2017 announced it interest in acquiring the South African cement company with 11 factories scattered all over southern part of Africa.

We will report more details on this as the news gets to us.

Odu’a Investment to Expand into Oil & Gas

Odu’a Investment Company Limited is planning to expand its business scope by venturing into the oil and gas sector.

The company, which is owned by the six South-West states, is currently involved in a wide range of business activities except oil and gas.

To actualise its entry into the sector, the company has sent representatives to this year’s Nigerian Content Workshop, which starts in Owerri today (Monday). The event is being organised by the House of Representatives Committee on Petroleum Resources in collaboration with the Ministry of Petroleum Resources, the Nigerian National Petroleum Corporation, Nigerian Content Development and Monitoring Board, and the Petroleum Technology Development Fund.

While explaining the group’s participation at the workshop, the Head, Corporate Affairs, Odu’a, Victor Ayetoro, said the management aimed at meeting stakeholders in the oil and gas sector at the workshop as part of its entry into the sector.

He stated, “Odu’a participation will provide a platform to interact with stakeholders in the oil and gas industry and also attract investment opportunities to the group, particularly in its insurance business, which is billed to showcase its various products and opportunities to the oil and gas industry.

“Also, Odu’a will take the exhibition opportunities to showcase its investment footprints, which include agro-allied business, real estate development, hospitality, insurance brokerage and construction.”

Ayetoro said that the Group Managing Director/CEO of Odu’a, Adewale Raji, was among those who would address the gathering at the workshop.

“Raji will be speaking on the topic, ‘The challenges to actualising local content in insurance for oil and gas industry,’” he said.

Discos Owe NIPPs N180bn, Reject Electricity Allocation

Odu’a Investment Company Limited is planning to expand its business scope by venturing into the oil and gas sector.

The company, which is owned by the six South-West states, is currently involved in a wide range of business activities except oil and gas.

To actualise its entry into the sector, the company has sent representatives to this year’s Nigerian Content Workshop, which starts in Owerri today (Monday). The event is being organised by the House of Representatives Committee on Petroleum Resources in collaboration with the Ministry of Petroleum Resources, the Nigerian National Petroleum Corporation, Nigerian Content Development and Monitoring Board, and the Petroleum Technology Development Fund.

While explaining the group’s participation at the workshop, the Head, Corporate Affairs, Odu’a, Victor Ayetoro, said the management aimed at meeting stakeholders in the oil and gas sector at the workshop as part of its entry into the sector.

He stated, “Odu’a participation will provide a platform to interact with stakeholders in the oil and gas industry and also attract investment opportunities to the group, particularly in its insurance business, which is billed to showcase its various products and opportunities to the oil and gas industry.

“Also, Odu’a will take the exhibition opportunities to showcase its investment footprints, which include agro-allied business, real estate development, hospitality, insurance brokerage and construction.”

Ayetoro said that the Group Managing Director/CEO of Odu’a, Adewale Raji, was among those who would address the gathering at the workshop.

“Raji will be speaking on the topic, ‘The challenges to actualising local content in insurance for oil and gas industry,’” he said.

Bid for Lafarge Audit Job was Keen – EY

Consultancy firm, Ernst & Young (Nigeria), has said that the bid process for the external auditor assignment of Lafarge Africa Plc was competitive.

EY, in an email post said, “The selection of external auditor by Lafarge Africa was through a competitive selection process where EY, the existing auditor, was replaced by another Big 4 firm.”

The company said though it lost out in the bid, it was not dumped by Lafarge as due process was followed.

In the same vein, the Head, Corporate communications, Lafarge Africa, Mr. Osagie Ogunbor, in an email response, said the board of directors of Lafarge Africa as a consequence of the restructuring of the business of the group opened a tender for the audit of the company’s group accounts after the last Annual General Meeting.

He said, “Following from the tender, KPMG Professional Services was approved by the board of directors to hold office as external auditors until the next Annual General Meeting of the company at which the shareholders would be asked to ratify their appointment.

“The board of directors of Lafarge Africa Plc has appreciated the services of Ernst & Young, the former external auditors of the group and commended the professional manner they handed over to the new group external auditors.

“In line with listing requirements, the appointment of KPMG Professional Services as the new group external auditors has since been notified to the Nigerian Stock Exchange.”

Last week, Lafarge Africa Plc, in a letter signed by its Company Secretary/Legal Director, Mrs. Edith Onwuchekwa,  informed the NSE of the change.

Shareholders seek Transparency as SEC Probes Oando

Some shareholders of Oando Plc have appealed to the Securities and Exchange Commission to disclose fully its findings from the investigation of Oando over alleged mismanagement and financial immodesty, following a directive from the House of Representative Committee on Capital Markets and other Financial Institutions.

The shareholders, while addressing journalists in Lagos, said they were keen on protecting their investments in the company and would need the regulator to do a thorough job in that respect.

The shareholders alleged that some shareholders’ leaders were being used to distort the investigative process, saying that SEC should not allow it to be distracted as the moves were selfishly motivated.

The National Coordinator of Trusted Shareholders Association of Nigeria, Alhaji Muhktar Muhktar, said the duty of regulators in any capital market was to protect the interest of shareholders, notwithstanding whose ox is gored, even the management.

He warned that some shareholders from the northern part of the country would protest if the process appeared to be influenced to the detriment of some shareholders.

He said, “We have it on good authority that some people who parade themselves as shareholders are trying to influence the decision of SEC as regards our petition to the National Assembly on the mismanagement of our company, Oando Plc.

“We will not take it. The annual report is there for everybody to see. We have observed for three years now that the financial operations of the company had been worrisome and there were critical matters that affect our investment.

Also commenting, the President, Renaissance Shareholders Association of Nigeria, Mr. Olufemi Timothy, called on SEC to do what was needful to restore investors’ confidence in the country’s capital market.

“SEC should use its good office to save our investment in Oando by looking into these matters. We believe in the interest of fairness, justice and equity, there should be a change in management.  An independent new management must step in to save our investment in the interest of the Nigerian capital market,” he added.