By Lukman Otunuga, Senior Market Analyst, FXTM
This will be a week defined by high-impact events and corporate earnings from the largest companies in the world.
Nigeria’s central bank is expected to hold interest rates on Tuesday.
This decision is likely based on still stubbornly high inflation despite price pressures easing in recent months. Inflation slowed to 22.2% year-on-year in June, its third consecutive decline. A CBN rate cut could be on the cards in H2, but this will be on the back of persistently falling price pressures.
Looking at the NGX All Share Index, it has gained almost 10% month-to-date – pushing 2025 gains to nearly 30%. This means the NGX is currently outperforming the S&P500 and Nasdaq100 who have gained roughly 7% and 11% this year respectively. The Naira spot has held its ground against the USD this year after depreciating almost 70% in 2024.
Outside of Nigeria, earnings season is in full swing with US banks reporting strong results last week. Now the spotlight shines on big tech with Alphabet and Tesla reporting on Wednesday.
Alphabet shares gained 14% in Q2 amid strong AI product demand and growth in the cloud business. However, bulls may need a fresh catalyst to push Alphabet’s year-to-date gains out of the red. Tesla is down almost 20% year-to-date and could extend losses if its latest quarterly results are below market expectations
On the data front, key releases from Europe, the United Kingdom, Japan, and the United States may influence global sentiment.
But the main event for FX markets could be the European Central Bank decision on Thursday. No changes are expected to interest rates, but any clues offered on future moves could spark fresh volatility. Traders are currently pricing in a less than 50% probability that the ECB cuts rates by September
Speaking of FX, the dollar has weakened across the board with the DXY tumbling toward 97.70. This weakness could be based on mounting pressure from Trump to cut US rates and caution ahead of the tariff deadline on August 1st.
Note: Nigeria faces a 14% reciprocal tariff on its goods imported into the U.S, effective from August 1st.
