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APAC should be hogging most traders’ attention in the first half of the coming week. China and New Zealand take the spotlight up to Wednesday. A sprinkling of US and European data helps to round out the offerings.

*Please note; Author is working from UTC +13 when determining the timeline of data releases.

What Will Traders Be Watching This Week?

22 Nov – 26 Nov, 2021

Monday, November 22:

China opens the week and reveals its 1Y Loan Prime Rate. The People’s Bank of China (PBoC) has kept the 1Y Loan Prime Rate at 3.85% for the past 18 months. No change in the rate is expected on Monday. However, looking to a long-term change, China’s Premier Li Keqiang noted on Friday that China is facing “many challenges” in managing the downward pressure on its economic growth and rising commodity prices.

Tuesday, November 23:

New Zealand releases data on Retails Sales (Q3) in the lead up to the country’s Central Bank Interest Rate decision on Wednesday. Retail Sales in the last two quarters rose 3.3% and 2.8% respectively. A projected -0.5% is expected in Q3 as the country’s largest city has been in lockdown for the entire Q3 period.

European and Great Britain Markit PMI Composite data (NOV) is also released on Tuesday. Aggregating the data from the economies’ Manufacturing and Service sectors, the PMI is a broad indicator of economic expansion or retraction. Although still firmly within an expansionary range, a slight pullback in the PMI values is expected for both economies.

Traders

 

Wednesday, November 24:

US Markit PMI Composite data (NOV) is up next. Unlike Tuesday’s PMI data, US PMI is expected to lift ever so slightly from 58.4 to 58.8.

As mentioned above, the Reserve Bank of New Zealand (RBNZ) will be updating the market as to its Interest Rate decision. A 25 basis point hike to 0.75% is all but guaranteed at this point. Speculation of a 50 basis point hike has emerged in reaction to Inflation Expectation in the country, reaching 2.96% in two years. Although, such a significant hike is unlikely and deviates from RBNZ precedence.

 

Thursday, November 25:

Thursday is all about the United States. For October, durable Goods Orders, New Home Sales, and Personal Spending data are released in quick succession. Any beat or miss in the slightly optimistic forecasts for these data points should be pounced upon by traders.

The FOMC minutes are then released later in the morning. Fed representatives have been vocal about their stance on inflation, employment, and the need to keep a loose monetary policy for the short term, all last week. These notes should be reflected in the FOMC minutes.

Traders

Friday, November 26:

A quiet Friday closes the week. South Korea’s Interest Rate decision should be watched closely. A 25 basis point increase is possible, which would bump the Interest Rate to 1% from 0.75%. Analysts are split as to its likelihood as the South Korean Government has other tricks up its sleeve to curb rising prices (such as removing fuel taxes).

The trend of GDPUSD

The US dollar and the pound were steady on Wednesday, and EU leaders are considering a request for a postponement of the Brexit, which is expected to extend the October 31 deadline by three months.

European Council President Tusk said on Twitter late Tuesday that he has suggested that EU leaders support the postponement of voting. British Prime Minister Johnson was forced by the parliament to extend for three months. However, some EU countries, especially France, may still require shorter deadlines. Johnson called the European Council President Tusk this morning to inform Tusk that he opposed the extension of Brexit and still hopes to leave the EU on October 31. The parliament will vote on the extension of Brexit and the parliament will hand over control to the EU.

EU officials recently stated that the EU will not decide on the extension of Brexit today. And then the decision may be made on Friday. Earlier, the British parliament made a dramatic vote on Tuesday, accepting the agreement in principle, but vetoed a three-day timetable for passing the necessary legislation. After the pound fell against the dollar and the euro on Tuesday, foreign exchange trading was generally calm. Today, the pound/dollar rose, hitting a high of 1.29115. The US dollar index also rose slightly, hitting a high of 97.66 in the day.

Johnson had previously threatened that if the parliament did not agree with his timetable, he would cancel the agreement, but he did not honour the threat. The market believes that this almost eliminates the possibility of no agreement to leave the European Union. Earlier Wednesday, the uncertainty of Brexit boosted safe-haven currencies. However, after the outside world believes that the EU may approve the extension, the rise of the yen and the Swiss franc will fade. The yen fell slightly to 108.55 against the US dollar and 0.991 against the Swiss franc.

USDTRY dropped after Trump Speech

On 23 October, US President Trump announced that the United States will lift sanctions against Turkey because of a "permanent" ceasefire agreement between Turkey and Kurdish armed groups. After the news came, the Turkish lira, ETF and government bonds rose.

Turkey invaded northern Syria earlier this month, and Trump said Turkey’s ceasefire in the region is "permanent". Trump said at the White House: "Unless something that we are not satisfied with, the sanctions will be lifted." Trump said that the ceasefire in Syria has remained very good, and Turkey told the United States that they will permanently cease-fire. If Turkey fails to implement the agreement, sanctions will be re-applied, including tariffs on steel and other products. Trump said: "Let someone else fight over this long-bloodstained sand".

President Trump also pointed out that small-scale US troops will still be maintained in the region (areas with crude oil) and will decide how to deal with crude oil in the future. Trump said that Turkish President Erdogan has done the right thing for his country and he will meet Erdogan shortly.

Donald Trump used this speech to respond to criticisms, even from members of his party. Their decision to withdraw US troops from northern Syria was considered as a major geopolitical mistake. It would allow the United States to abandon its allies and hand over its territory and influence to the regional enemy. He said: "Today's announcement confirmed to Turkey the actions we took. Just a few weeks ago, Turkey also sneered at our actions. Now, people say, wow, what a great achievement, congratulations."

After the news of the lifting of the sanctions, the Turkish lira soared against the US dollar in a short-term. Therefore, the US dollar depreciates against the Turkish lira. Now the USDTRY is 5.72759. Also, the IShares Turkey ETF rose to 3.6%. Turkish government bonds rose.