Nigeria – Week Ahead: What to expect

BY: Lukman Otunuga, Senior Research Analyst at FXTM

Nigeria will unveil updates on key economic metrics in the week ahead with the Purchasing Managers’ Index (PMI) and foreign exchange reserve figures under the spotlight.

Investors will be paying very close attention to Nigeria’s manufacturing and non-manufacturing industry which should offer some insight into how the economy fared in July. Manufacturers across the globe have been hit by trade tensions and decelerating global growth. The impacts will most likely be reflected in Nigeria’s manufacturing PMI report for July which is projected to decline to 57.1. While a disappointing print will dent sentiment over the Nigerian economy, it must be kept in mind that everyone is feeling the impact of trade tensions and slow growth.

The Naira may be in store for a welcome boost mid-week if foreign exchange reserves jump in July to $46 billion Dollars as projected. Rising reserves will offer the Central Bank of Nigeria (CBN) more ammunition to defend the Naira from external and domestic risks. These risks revolve around Brexit, trade tensions and depreciating Oil prices.

Outside of Nigeria, the Federal Reserve will be the main talking point as it prepares to cut interest rates for the first time in over 10 years. The Bank of England is likely to signal a potential rate cut while the Bank of Japan is expected to keep rates steady. With the US jobs report scheduled for release on Friday, this will certainly be a very eventful trading week for financial markets.