This week ahead: Interest Rate Decisions, GDP
This week ahead: Interest Rate Decisions, GDP
We have a relatively fair number of economic events this week ahead. However, they are relatively significant in their effect on the financial markets and further fundamental guidance.
We’ve seen risk-on in currency markets recently, with many pairs against the U.S Dollar rallying on confidence that the economy will fare better in 2021. GBP/USD. Broke 1.40, while NZD/USD and AUD/USD both broke 0.78 and 0.73, respectively. Oil has been rallying on supply restriction due to middle east tensions and the snowstorm currently taking over Texas. Here is your week ahead.
Monday, 22nd February – People’s Republic of China’s Interest Rate Decision
With China stomping the virus faster than any country, their road to recovery has been patchy. With a couple of flare-ups in community transmission similar to that of New Zealand, China acted swiftly to secure the cases, ready emergency and hospital units, and shut the Coronavirus. With their economic recovery fully underway, Yi Gang has stated that China’s central will not “prematurely” exit from its supportive monetary policies. “Looking forward, I think our monetary policy will continue” and that “we will keep a delicate balance between supporting the economic recovery, at the same time, preventing risk.”
With the strength and the interest in the Chinese Yuan skyrocketing in 2020, the PBOC will introduce some measures to bring down the Yuan’s strength as it is fundamental to their exports. With that said, analysts predict the PBOC to lower the headline 1-year rate from 3.85%.
Monday, 22nd February and Wednesday, 24th February – NZ Retail Sales & Reserve Bank of New Zealand
With strict lockdowns imposed earlier in 2020, New Zealand has stomped the virus, China has, and life for its citizens has returned to a relative normal. With a flare-up in Auckland’s community cases last week, Auckland was put in a snap lockdown for three days for the government to assess the situation. They had come out of that lockdown after the three days but still face social distancing and capacity constraints in level 2.
However, with the domestic economy has been in full swing before the snap lockdown, analysts predict retail sales to stay healthy at 26.7% growth, slightly lower from the 28% growth the previous quarter.
Regarding the RBNZ’s interest rate decision, the mandate for the central bank of New Zealand is like many other central banks: Employment and Price Stability. A mandate they do not have is the control of house prices. However, with house prices skyrocketing almost 20% the past year, there has been pressure from politicians and analysts for the RBNZ to implement pricing controls.
The bank has reinstated loan-to-value ratios from first home buyers and investors, requiring investors to front up 40% of the house price as a deposit when purchasing a house, stating that the initial removal of LVR’s has done its job.
The initial optimism on negative rates has subsided on the New Zealand economy’s incredible bounce bank. Many banks are now rescinding their calls on negative rates, with banks such as ANZ calling a 15-basis point cut from 0.25% to 0.1%. ANZ’s economists stated that “If the housing market and domestic economy maintains momentum well into autumn, the RBNZ will not cut again at all.” However, they further stated that “If Covid-19 returns to our shores in a significant way, a negative OCR will once more be game on.”
Tuesday, 23rd February – U.K’s Unemployment Rate
United Kingdom’s vaccination program is leading the charge for their recovery. With their seven-day average way down from all-time highs, the start of the recovery is near for the United Kingdom. Nearly 18 million people in the United Kingdom had received at least one Coronavirus Vaccine dose, around 27 doses per 100 people. These were aimed at citizens aged 70 and higher, alongside healthcare workers, who have accounted for 88% of the United Kingdom’s Coronavirus deaths. Analysts predict
the 3-month rolling unemployment rate to rise slightly from 5% to 5.1% this week ahead.
Thursday, 25th February – U.S’ GDP 4th Quarter
Like that of the United Kingdom, the vaccine has led the charge for the recovery in the United States. Seven-day averages are nearly three months now, with over 61 million doses of the vaccine, or around 18.6 doses per 100 people. With Jerome Powell continuing to pledge his unwavering support for the American economy, alongside an optimistic 1.9 trillion-dollar stimulus, the potential for a rebound in the U.S economy may be on its way. Analysts predict a slight nudge higher in GDP growth at the end of the 4th quarter, up 0.1% to 4.1%, compared to 4% in the previous quarter.
A light week ahead events-wise. However, the events are heavy. Stay say, and trade safe.
BlackBull Markets has partnered up with Interac, enabling Canadian Clients an easy way to fund their trading account at BlackBull Markets directly from their Canadian bank account.
Indices across the board sold off today, making it the 5th session in decline as many investors and traders take high valuations as a good time to take profits. The NASDAQ is down the most in the past couple of sessions, as investors rotate out of an overcrowded “big tech” trade, down around 7%. The S&P 500 and the Dow Jones are down 2.5% and 0.6%, respectively.
We can see that WTI recently broke a Double Top. The next candle made a strong retracement back to a small support around 61.500 a barrel.
Ideally, we want this candle to close as a strong Bullish Candle to look for further moves to the upside.
Here we can see that AUDCAD has started to move into two converging lines forming a Symmetrical Triangle.
Wait for a break of this pattern for a potential move. This could happen as we approach the UK open.
Within an Elliott Wave Cycle. Currently, it seems that we have finished Wave 2 of Wave (v) after a 61.8% Fibonacci retracement of Wave 1 it made a strong move to the upside.
Using a Fibonacci Expansion, look for wave 3 to reach 100% to 161.8% of wave 1.
A strong downtrend creating a clean path back up. We can now see a Flat Top Trinagel being broken to the upside.
If it stays above 1.6200 Look for a Potential Target at about 1.67348
Black Bull Group Limited (trading name: BlackBull Markets) is a New Zealand registered and incorporated company (company number: 5463921).
We are also registered with the Financial Services Provider Register (number: FSP403326).
Black Bull Group UK Limited is registered in United Kingdom, Company Number - 9556804. Payment clearing services provided by: BlackBull Group UK Limited (Company Number - 9556804) Address - 483 Green Lanes, London, Greater London, United Kingdom, N13 485
Risk Warning: Trading foreign exchange on margin carries a high level of risk and may not be suitable for all investors. The high degree of leverage can work against you as well as for you. Before deciding to trade foreign exchange, you should carefully consider your investment objectives, level of experience, and risk appetite. The possibility exists that you could sustain a loss of some or all of your initial investment and, therefore, you should not invest money you cannot afford to lose. You should make yourself aware of all the risks associated with foreign exchange trading and seek advice from an independent financial advisor if you have any questions or concerns as to how a loss would affect your lifestyle.
All payments related to the Paysafe Group are facilitated by Black Bull Group Limited.
Copyright © 2021 Black Bull Group Limited. All Rights Reserved.