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FXTM Analysis: Time to Focus On OPEC Now That France is ‘Out of Sight’

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Jameel Ahmad

FXTM Vice President of Market Research, Jameel Ahmad comments on the upcoming OPEC meeting.

Investors have arrived in full force to exploit the opportunity to sell the Euro at its highest level since November 2016, with the EURUSD now appearing at risk to dropping back below 1.09 after briefly climbing above 1.10 when the markets opened for the week following confirmation of Macron becoming the new President of France.

While the lifeline of the Euro relief rally appears to be short-lived, I would go as far as to say that the Euro is heavily oversold at these levels and this is not linked to the headlines that Europe has defeated populism.

Although political headlines are still overshadowing economic news when it comes to the global market theme of 2017, there is an improved economic sentiment around Europe that has been building recently as a result of significantly improved data.

Perhaps the reason for the heavy selling pressure on the Euro at present is due to expectations that the European Central Bank (ECB) will leave monetary policy accommodative, despite the stronger data being seen around Europe.

Time to shift focus to upcoming OPEC meeting?
Now that the French election is out of the way, investors should highlight May 25 in their calendar, because this is when the next OPEC meeting is scheduled in Vienna. Traders should expect and be prepared for shifts in volatility in both directions when it comes to the price of Oil, as the markets speculate over what the outcome of the meeting could possibly be.

I expect for producing nations to publicly talk up the prospects of an extension to the current production cut agreement made late in 2016, but this doesn’t impact the underlying factor that the real fight OPEC has to deal with is a battle with US Shale production.

There has been an obvious correlation that inventories from Shale production in the US have improved in recent months, which is surely going to be weighing heavily in the minds of all the Oil ministers from both OPEC and non-members when they sit at the table in a couple of weeks.

As always investors should prepare for the unexpected when it comes to OPEC meetings with recent history in mind that there have been unexpected surprises from past meetings. With that in mind there are at least two possible risk scenarios that investors should consider in the lead up to the May 25 event:

While the organisation is currently committed to reducing output, that agreement expires next month. With the markets believing that the current collaboration will need to be extended, there is a risk that the markets will be caught off-guard with a decision to delay it, in order to prevent further US Shale production from reaching the landscape.

Should OPEC and Non-OPEC agree to an increase in production for the second half of the year, a volume war could be on the cards with this providing sellers with heavy encouragement to begin pricing in the resumption of heavy selling momentum and a possible return to the historic lows for Oil.

The other risk scenario that investors would be mindful to factor into consideration is that there is an agreement to throw in the towel and submit to extending not only the duration of the current agreement, but also cutting further output.

Although this would be seen as OPEC declaring Shale victorious in the production war and would also further weaken the credibility of oil producers who, until just a few years ago, were in full control of global oil production, it would most probably achieve a stronger rebound in the price of Oil.

Basically what this could come down to is whether OPEC and Non-OPEC members are willing to lose face by accepting defeat to Shale in return for a further boost in revenue, or are they committed to prolonging their participation in this ongoing production war with Shale?

GBPUSD not ready to touch 1.30 yet?
The Pound is trading in a very narrow range against the Dollar at the beginning of the week as the spotlight shines on the French election result, and it looks like the British Pound is shying away from touching 1.30 for the first time since September 2016.

While the Pound benefitted from some impressive PMI results last week, it is possible that investors will shift their attention to the Bank of England (BoE) and the likelihood of inflation risks being highlighted when the latest inflation report is delivered this Thursday.

 

 

 

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E-Financial

Customers to Sue Banks over Stamp Duty Collections

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Stakeholders have called on the Central Bank of Nigeria (CBN) to withdraw its circular mandating banks to collect stamp duties from customers’ bank accounts, stressing that such directive and practice is unconstitutional, according to the Tribune.

According to them, if the practice of deducting stamp duties from customers’ bank accounts is not suspended, it is expected that other stakeholders would challenge the banks in court, on a case by case basis.

Thus, the impending legal suits that would emanate as a result are likely to disrupt the activities of banks and result to additional legal costs, they warned.

Stakeholders at various occasions have also charged deposit money banks to suspend the practice of collecting stamp duties on receipts for deposits and transfers by customers.

The Stamp Duties Act (SDA), Chapter S8, Laws of the Federation of Nigeria (LFN) 2004 (SDA) provides the legal basis for the imposition and collection of stamp duties in Nigeria.

A tax audit and financial advisory services firm, Deloitte, in a document titled: “Stamp Duties on Bank Deposits and Transfers: Are There Unresolved Issues?” and obtained by Tribune stated that, stamp duties are chargeable on all instruments relating to matters executed between a company and individual, group or body of individuals and those executed between persons or individuals. The instruments the firm noted, upon which stamp duties are chargeable include bond, bill of exchange, promissory note, covenant, conveyance on sale, lease, mortgage, among others.

This general rule according to the tax experts did not include receipts for transfer to self, transfers from savings accounts and receipts in respect of salaries and wages, yet, further to a statement issued by CBN on 21 January 2016 banks have continued to deduct these duties.

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UBA Disrupts the Market, Delights Customers with Callback Technology

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It would appear that the United Bank for Africa Plc has carved a niche for itself and gone way above its peers with its deployment of Al-powered Callback Technology.

The Al-Powered Callback Technology is one that enables the bank to call back customers instantly when they contact the bank for one reason or the other.

The UBA Group seems to have taken advantage of this high-powered system that even western banks are yet to fully implement as it has gone beyond the legacy banking systems, to omni channel marketing and social media lead generation.

This largely involves meeting its customers where they are – on websites, email, social networks, and cross-device platforms.

It is interesting to note that customers calling the bank for various reasons now have the option of requesting a call back to get on demand information. This has been implemented by using web to phone callback technology developed by Lucep.

Basically, the way it works is that customers can see the website widget deployed on the bank’s website for several financial services and products, wherein they can enter in their name and number, and select the reason for which they want a call back.

Thereafter, the Lucep AI takes the callback request, and distributes it to the right team, ensuring it goes to an authorized member of the team who has the app on their smartphone. This member can then connect back to the customer through the app itself.

Such instant response systems have huge benefits especially when it’s about following up on new customers who are inquiring about banking services.

If for example, a potential client is searching for the best mortgage rates and calls several banks including UBA.

UBA being the only bank that has implemented this Al -powered technology with an instant lead response system, is able to give the customer a call-back within one or two minutes.

This activity will naturally give the bank an edge over its competition as it will probably be the first to reach the customer back. The bank is therefore able to engage customers and offer their services faster than any other bank.

It is this kind of attention to detail, personalized service, and deft use of the latest technologies that has helped UBA stay ahead of its competitors in Africa, and ahead of the trends in the global banking industry.

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Five ‘Must’ Know Before Putting Your Money in Bitcoin

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Bitcoin is a type of digital currency in which encryption techniques are used to regulate the generation of units of currency and verify the transfer of funds, operating independently of a central bank. Bitcoin is now worth $4,317.

Due to this, many are encouraging others to invest in the cryptocurrency. Nigerians are slowly embracing Bitcoin.

In line with this, Jumia Travel, the leading online travel agency share things Nigerians must know before joining the Bitcoin train.

More People Are Using Bitcoin
Despite the fact that some Nigerians are struggling to accept Bitcoin, more people are embracing it after years of gradual growth.
Hence, whether we like it or not, Bitcoin is the future and we have no choice than to use it.

Retailers And Vendors Are Accepting Bitcoin
You can now pay for whatever you purchase online with Bitcoin as some retailers have made it possible to settle transactions with it. Some notable companies that accept Bitcoin include Expedia, Microsoft, Subway, Newegg, TigerDirect, Tesla and PayPal. So, do not be surprised when some Nigerian companies start to accept Bitcoin.

Bitcoin Transfers Are Fast And flexible
While many financial institutions charge you or take days to process transactions, Bitcoin allows transfers from one account to another almost for free. Of course, you must already have your money in Bitcoin form. There is no need for any middlemen. As a result, the transfer is seamless.

Extremely Volatile
Bitcoin is still growing like earlier mentioned and there are a number of market factors that influence it. It very dependent on the rules of demand and supply.
The more people are willing to buy Bitcoins, the more the Bitcoin value will increase. Conversely, if more people sell, the prices will decline.

Treat It As Speculating, Not An Investment
Cryptocurrencies have a bright future as a new way to conduct commerce and business. That is not the same thing as saying that their value right now is sustainable. It’s early days yet, and, while the number of businesses accepting cryptocurrencies are growing, it’s not big enough for most of the demand to be built on legitimate trade.
This means that buying cryptocurrencies is speculation, not investment. Hence, you should be willing to lose the money you invest in buying Bitcoin!

 

 

 

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