By Lukman Otunuga, Senior Research Analyst, FXTM
The biggest macro event for Nigeria will be September’s CPI report on October 15th which is likely to show inflation easing to 18.8% year-on-year from 20.1% in August.
A combination of softer food prices and a strengthening naira may have tamed prices pressures. Further signs of cooling price pressures may pave the way for further rate cuts by the CBN in November to stimulate economic growth.
Outside of Nigeria, it’s another week packed with high-risk events and market shaking themes.
A 200-word post by Trump on Truth Social was enough to erase almost $2 trillion from US markets last Friday.
Risk aversion engulfed global markets after Trump threatened to impose an additional 100% tariff on Chinese goods starting from 1st November. US equity bulls were slaughtered as the S&P 500 tumbled 2.7% – its worst session since April.
The pain spread beyond equities with Bitcoin collapsing like a house of cards while safe-haven gold glittered through the chaos.
Over the weekend, the Trump administration signalled an openness to talk with China, which has slightly eased concerns. Regardless, the damage has already been done with US-China trade uncertainty coming at a time when investors are already jittery over the US government shutdown, which started on 1st October.
US banks are expected to report strong Q3 earnings thanks to a rebound in investment banking. Easing regulations and expectations for lower US interest rates have boosted mergers and acquisition deals.
Fed Chair Jerome Powell will be back under the spotlight on Tuesday as he speaks at the NABE Annual meeting. Should Powell offer any clues on future policy moves, this may trigger outsized reactions in the absence of US government economic data.
In the commodity space, gold touched a fresh all-time high above $4070 on Monday amid US-China trade tensions. The precious metal has secured eight consecutive weeks of gains and is up almost 55% year-to-date. Given the fresh wave of risk aversion, the powerful bull run could extend towards $4100 and higher if $4050 proves to be reliable support.
