Market News

Lukman Otunuga, Senior Market Analyst at FXTM Academy, has highlighted how looming global economic events could influence Nigeria’s inflation outlook, oil prices, and the strength of the naira in the coming days.

Speaking ahead of a week packed with high-risk financial developments, Otunuga noted that top-tier global data, including U.S. inflation figures, the start of the earnings season, and the U.S. Congress’ “Crypto Week” — could inject fresh volatility into global markets and present new opportunities.

He warned that renewed uncertainty over global trade may intensify after former U.S. President Donald Trump threatened to impose 35% tariffs on the European Union and Mexico over the weekend.

On the U.S. inflation outlook, Otunuga explained that any signs of rising consumer prices — with the market forecasting a CPI increase to 2.6% and core CPI to 2.9% — may weaken expectations of Federal Reserve interest rate cuts, potentially strengthening the dollar and tightening global financial conditions.

Turning to Nigeria, the FXTM analyst said the country’s Consumer Price Index (CPI) for June, due for release on July 15, is expected to reflect continued cooling in inflationary pressures.

He projected that headline inflation may have declined to 21.4% year-on-year, down from 23% in May — marking the fourth consecutive monthly drop. He added that this trend could offer some relief to the Central Bank of Nigeria (CBN), which implemented a series of interest rate hikes throughout 2024 to curb inflation.

However, Otunuga noted that the inflation slowdown is more of a technical correction, driven by recent gains in the naira, a weaker U.S. dollar, and increased non-oil exports.

“While the decline in inflation is welcome news, it is largely supported by temporary factors rather than structural reforms,” he said.

Otunuga said, “The CBN is scheduled to meet later this month and will most likely keep rates unchanged at 27.5 per cent.

“One key challenge for the country will be how to re-tweak its budget for lower oil prices. Indeed, the budget was based around oil production at 2 million barrels and oil prices of $75. Brent is trading around $70, with the nation producing 1.544m b/d of crude in May, according to OPEC.

“Nigeria is hoping to raise production to 1.9m b/d by the end of 2025. But its impact on the economy may be muted if oversupply and tepid demand keep oil prices subdued. Brent is up four per cent this month but still down over six per cent since the start of 2025.”