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Based out of Auckland, New Zealand, we bring an institutional trading experience to the retail market.

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).

NZD/AUD – Battle Of The Interest Rates

NZD/AUD is approaching a robust congested area at around 0.925. A downwards channel sees a possible move further lower may see the pair come a level below 0.9. However, an action lower will be dictated on which economy puts the brakes on monetary stimulus first.

NZD/USD Looking To Test That Support At 0.925

NZD/USD - Monetary policy dictated by the state of the economy

During the peak of the Coronavirus, the best method of suppressing the virus was not evident. This is where Australia and New Zealand's strategies diverged.

Australia went for a loose lockdown, allowing citizens to roam freely without restricting them to their houses. They did enforce social distancing laws alongside mask-wearing.

New Zealand went for a strict lockdown, only allowing citizens to leave their house to exercise, get groceries and go to the doctors. Essential workers were given a pass to go to work.

It became evident as to what method was more successful. There were critics initially questioning New Zealand's method, pointing to the likes of Australia and Japan, who were getting similar results to New Zealand per capita, however, without the devastating economic cost of a lockdown. Those critics were soon to be silenced after New Zealand slowly pulled out their nearly six-week lockdown, well on their way to recovery. On the other hand, Australia had a devastating second wave that forced the inevitable – a strict lockdown. However, by then, New Zealand was back open and running.

With a head start in Australia's economic recovery, New Zealand has been showing signs of slowing its fiscal and monetary policy measures. Recently, The Reserve Bank of New Zealand (RBNZ) re-instated policies regarding mortgages issued by banks, which require house investors to front up 40% of the house sale price if they want to purchase a house. These were temporarily removed during the peak of the Coronavirus in 2020 to stimulate the economy. However, they were placed back after the national median price jumped up to $730,000, up 19.3%.

However, a country that is heavily dependant on tourism is struggling due to the strict border controls. Westpac analysts predict New Zealand's GDP to fall 0.7 over the six months to March due to the lack of tourists. Dominick Stephens stated that "tourism is highly seasonal, and there is normally a strong net inflow of people into the country in the summer months. The absence of visitors was felt keenly in the December quarter, and will be even more so in the March quarter, which would have otherwise been the peak tourist season."

Australia Closing In On New Zealand Coronavirus Lead

Australia has not had a good time dealing with the Coronavirus. Outsourcing security of their quarantine to a private company did not end well, with the spread of the virus being exacerbated by the security guards sleeping with the Coronavirus guests. This, alongside lax state line restrictions, pushed Coronavirus cases up, forcing two lockdowns. However, there is some optimism in the Australian economy, with many of their commodities' prices reaching all-time highs. Furthermore, the Reserve Bank of Australia stating that the "recovery in the second half of 2020 had been faster than initially expected."

I believe the economy that starts tapering monetary policy programs will first see their currency strengthen against the other. With the RBA stating that they are "committed to doing what it reasonably could to support the Australian economy" and that "significant monetary support would be required for some time," it looks like New Zealand in the mid to long term will be raising rates before Australia will, given the actions they took with loan-to-value ratios, alongside the consistent recovery from the Coronavirus.

Week ahead - Fed Interest Rates, GDP

We have a relatively light data week ahead regarding the amount of significant data points coming out. However, the economic events are extremely significant in determining the state of their respective economies. Hope you all are staying safe. Here is your week ahead.

Fed Chairman Jerome Powell set to speak this week ahead

Tuesday, 26th January – United Kingdom's Unemployment Rate

United Kingdom's Coronavirus situation looks like it's seeing the light at the end of the tunnel.  With Vaccinations fully underway, paired with strict lockdown measures, daily cases have fallen from their peak in early January.

However, that's not to say they're entirely out of the woods yet. The 7-day average continues to be at unsustainable levels, around 37,000. Furthermore, with a new Coronavirus strain proving as much as 1.5x more transmissible, the National Health Service struggles to cope. Soldiers have been dispatched to move patents and equipment around London hospitals, showing how overstretched the health system is in the United Kingdom.

The critical thing to note is that the UK's Coronavirus situation is just starting to improve. They are nowhere near the stages of their economic environment improving. This should be considered when looking at the UK's unemployment figures this week ahead, with analysts expecting quarterly unemployment figures to rise to 5.1%, up from 4.9% the quarter before. There is a high possibility that the unemployment rate is higher than this, and my prediction is that it will be given the state in the United Kingdom. We may see numbers up to 5.3% this week ahead.

Wednesday, 27th January – Australia's CPI Figures

Source: Bloomberg

Australia continues to maintain a good grip on the Coronavirus after a devastating second wave in the middle of 2020. A decrease in rental income in inner cities alongside increased savings in many households has pushed restaurant and café prices higher, alongside commodities such as lumber to record highs. With interest rates at 0.1%, the RBA is having a difficult time spurring inflation. However, the Australian Bureau of Statistics predicts a rise in CPI by 0.3% due to the rise in childcare costs.

Wednesday, 27th January and Thursday 28th January – Federal Reserve's Interest Rate Decision and United State GDP

A new President at the helm of the United States hasn't deterred Federal Reserve Chairman Jerome Powell from the mandate of the Reserve Bank: Employment and Inflation. In the past couple of meetings, the central bank has reiterated that it is committed to using all the tools available to support the US Economy. Analysts are expecting the FOMC committee to leave rates as is, at 0.25%. Furthermore, Quarterly GDP figures for the US are set to be released this week ahead, with Bloomberg analysts predicting a 4.2% expansion in the last three months of 2020.

Friday, 29th January – Germany's GDP Figures.

With Germany under lockdown till 14th February, a positive economic recovery coming shortly has all but vanished. The country did relatively well in halting the spread of the virus in the first wave – however, they have not been able to contain the second wave. Germany recently surpassed the grim milestone of 50,000 deaths, as many German citizens are refusing to self-isolate, prompting the German government to force them into detention centers.

With Germany in a dire state alongside a shortage in vaccines, Health Minister Jens Spahn told a local German Newspaper that the government had purchased a new antibody-based drug to fight the Coronavirus, costing the government over 400 Million euros for 200,000 doses.  Analysts had estimated a 4.4% growth in GDP – however, due to the second lockdown, there has been a Sharp revision downwards to an estimated 3% GDP growth.

A lighter week ahead. However, still an eventful one for sure.  Trade safe, and stay safe.

Week ahead - GDP, CPI and BoC Interest Rates

All eyes will be on the UK’s rollout of the Pfizer-BioNtech vaccine this week ahead, as the first western country to approve a Coronavirus vaccine starts to vaccinate front line workers. However, the NHS medical director warned the vaccine distribution would be a “marathon, not a sprint” and that it will take “many months” to vaccine everybody who needs it. Is this the beginning of the end? Here’s your week ahead.

Monday, 7th December – Japan’s GDP Quarter over Quarter

The Covid Cycle

Japan’s Coronavirus graph symbolizes the problem of loosening coronavirus restrictions when community transmission has not thoroughly be wiped out. Japan has, in essence, entered its third wave of the Coronavirus. Japan recorded over 2,497 new Coronavirus cases on Saturday, alongside 13 deaths.

Japan's Third Wave

There are over 161,618 confirmed cases in Japan. Osaka Governor Yoshimura Hirofuki stated, “It’s getting harder to provide treatment to people with serious symptoms. This is the right timing to issue a red alert. It’s a declaration of an emergency in medical care. Our first priority will be protecting life. “This is on a warning to all Osaka residents to refrain from leaving their homes for any non-essential reason until the middle of this month. Note that this is not a strict requirement.  Analysts predict a GDP quarter over quarter figure of 5%, identical to that last quarter.

Tuesday, 8th December and Thursday 10th December – Europe’s GDP Year over Year and ECB’s Interest Rate Decision

Similar to Japan, Europe paid the cost of reopening early when community transmission was not thoroughly squashed. A second wave has come all across Europe, forcing governments to place their citizens back into lockdown. The attempt to balance economic damage and human lives had backfired. Any optimism on a successful summer had disappeared. This GDP report is likely to show the effects of the premature reopening on the European economy.

Furthermore, the ECB has signaled that they are willing to provide more stimulus coming into 2021 for the European Union. Whether this comes through as further cuts or quantitative easing is unsure. However, a cut this week ahead will be less surprising after the effects of a second have on Europe.

Wednesday, 9th December – Bank of Canada’s Interest Rate decision

Unfortunately, it will sound like this article is a record on repeat. However, this is the environment around the world due to the premature lifting of restrictions. Canada did not enforce a strict lockdown; however, the government recommended citizens stay at home during the Coronavirus peak earlier this year. Initially, they were praised for their low Coronavirus cases earlier on, like Japan. However, time affirmed that this method was not effective. They’re currently at the peak of their Coronavirus daily cases, with Canada’s Chief Public Health Officer Dr. Theresa Tam stating that it is “unknown” when Canada will reach heard immunity from the Coronavirus. Bank of Canada is set to hold interest rates at 0.25%.

Wednesday, 9th December – China’s CPI

Unlike the previous countries stated above, China went for a hard and fast tactic, restricting citizens’ movements drastically, under police supervision. This has seemed to work, with community transmission staying put in China.  With that said, China’s CPI figures are expected to come a little bit softer than the previous month, at 0% growth.

Lighter week ahead. Eyes on the vaccine rollout in the UK. Stay safe and Trade safe.

RBA Slashes rates to 0.1%

As predicted by many analysts, the Reserve Bank of Australia has slashed rates from 0.25% to 0.1%, a 15-point cut. Furthermore, they've decided to buy back over $100 Billion government bonds of maturities around 5 to 10 years over the next six months.

Interest Rates Slashed to 0.1%
AUD/USD down 0.44% on the news

The Australian Dollar again, the U.S dollar was down slightly at 0.44%. The ASX 200 was up around 1.88% on the announcement.

Reserve Bank of Australia less dovish on the future of the Economy

The Bank stated they believe that the "economic recovery is underway and positive GDP growth is not expected in the September quarter" despite the restrictions in Victoria. They predict that GDP growth will be around 6% over the year to June 2021.
They believe that the employment rate is expected to be high – however, it may peak at around 8%, rather than the 10% expected previously. The RBA stated that they are "committed to doing what it can to support the creation of jobs."

This is the third time this year that interest rate has been cut. From 0.75% - 0.5%, 0.5% to 0.25% and now 0.25 to 0.1%.

Treasurer Josh Frydenberg stated that many families would benefit from the rate cut may be able to and lift the country out of a recession. He references someone with a $400,000 mortgage that may save around $1,000 a year from the 0.75% - 0.1% basis point cut. With that said, interest rates are relatively low, so the benefits may be negligible to many, considering the potential further costs of re-mortgaging.

Low rates may be welcome for the housing market of Australia

Demand for housing may increase on the rate cut, possibly helping the Australian economy boost out of the current recession caused by the Coronavirus. However, some analysts predict that the RBA's cut will not increase demand as rates are at rock bottom. ANZ" s Banking Group Ltd CEO Shayne Elliot stated that "If homeowners don't want a mortgage at 2.5%, it's not clear to me they'll want one at 2.4%."

With the lockdown forcing many Australian Citizens to stay at home, the nation's saving ratio soared to a 46-year high to almost 20%. Furthermore, there is evidence from the RBA that credit card balances are being paid off faster. These are positive factors, which may push Australia out of the recession quicker once lockdowns and the Coronavirus are in the past.

Some analysts are not convinced the RBA is not doing enough. James McIntyre, Australia economist at Bloomberg Economics, stated, "with a sluggish demand outlook and a weaker labour market justifying further policy support, it is difficult for the RBA to make a case to hold back," insinuating he believes that the RBA must do more to push Australia out of the slump.

It is essential to keep an eye on the other side of the equation, the U.S dollar, as the election approaches less than a day. Trade safe!

NASDAQ ranges as Coronavirus licks 30 million

Much of the excitement that fueled the rise in equity markets has fizzled out on a recent downbeat and neutral news on the Coronavirus development.

NASDAQ 100 has been ranging

From its March lows, the NASDAQ 100 has returned 83.26% from its peak at the start of September. This legendary market rally came from Jerome Powell and the Federal reserve’s loosening monetary policy in March. However, Powell’s dovish stance yesterday, hinting that he is willing to keep rates near zero till 2023, has made traders and investors realize to support these lofty valuations, even in tech stocks, we will need more positive developments regarding the Coronavirus.

Market indices have retracted on lofty valuations from its peak in early September, with the NASDAQ 100 retracting 10%. The Bank of International settlements attempted to quantify how much of the rally this year has been driven by rate cuts, and they estimate that “close to half and a fifth of the rebound in the US and Euro area” were due to the rate cuts.

Interesting problem regarding the NASDAQ and the other indices

The problem regarding the equity markets is interesting. If there is no good news regarding the Coronavirus (vaccine, decreasing Coronavirus), the Market won’t do anything. However, if the Fed does not provide a “more than expected” dovish stance on their meetings, the Market will assume accommodative environments will disappear, forcing a sell-off. Simply put, the Market wants good world conditions, alongside accommodative financial conditions. We currently are in the best accommodative conditions for equities, which is a larger factor than the global conditions. Any improvement in the global environment will see the Fed cut back on accommodative policy, possibly hurting equity prices.

Central banks back the idea that low rates spur asset prices upwards – an intended consequence in monetary policy. However, this year’s rally is something that central bankers don’t want to admit they were responsible for, mainly because they don’t want to validify the Powell “put,” instilling excessive risk in investors mind.

Currently, the Market has been ranging in a clear consolidation. Only a clearer Coronavirus pathway will push equity markets further.

Deeper downside for the dollar?

The dollar has seen better days.

Is the US Dollar going to reach a level not seen since 2018?

In the past 124 trading days, only 46 has been in the green for the dollar index.

Many factors have catalyzed this risk off-trend, and unfortunately, I believe even the key fundamental strength for the dollar has slowly diminished away during this pandemic.

Inflation is the dollar's demise.

Inflation in the United States diminishes two things. A) The buying power of the U.S. dollar and B) Real bond yields. Both factors disincentivize investors to hold U.S. dollars. Furthermore, with the Federal reserve implementing a new tool specifically to combat low inflation, it all but guarantees that inflation will rise in the near future, diminishing the U.S. Dollar's power.

Dollar printer.. go brrr...

Federal Reserve's Balance Sheet

The Federal Reserve balance sheet stayed relatively unchanged from 2015 to 2020, dipping below 4.5 trillion near the end of 2020. However, due to the increase of asset purchases to stabilize the financial system, their balance sheet swelled up to 7 trillion at the start of August. The buying back of bonds increases the supply of U.S. dollars in the money market, decreasing the value.

Low-Interest rates have made it cheaper to hedge against the U.S. Dollar.

Many overseas investors, including myself, are pleased to hear dollar weakness as it entails, I will get more U.S. dollars when I convert my New Zealand dollars to fund my brokerage account. However, if I wanted to sell positions and covert it back into New Zealand dollars, chances are the U.S. dollar's weakness will erase a majority of the gains made. However, with low-interest rates, institutional investors have found it cheaper to short the U.S. dollar to hedge their equity positions from further downwards pressure.

"Safe haven" trade has been given to Gold

We saw the U.S. dollar rally against other major currency pairs during the peak of the lockdowns in March as major investors sold off their risk-on assets to hold U.S. dollars. However, as the market reaches all-time highs, the U.S. dollar, with its almost guaranteed diminishing yield, has lost interest from investors in favor of Gold.

This is the main problem for the U.S. dollar. One of the only fundamental strengths that the U.S. dollar has had this year was when there was a rush to hold the greenback in the risk-off period we had in the middle of March/April. However, two things have changed since then:
• Market sentiment has favored Gold in Risk-off days
• "Risk-off "periods like March / April is likely not to occur again

Dollar struggles in the new normal

Coronavirus cases continue to pile up in India, United States, Australia, and Europe – however, investors have continued to plow money into the equity markets. To put this into perspective, cases in the United States have only worsened since the peak of the recessionary period in March / April. However, the NASDAQ is up nearly 30% year to date. If the market is a voting machine, it has voted that the new normal is the Coronavirus running rampant everywhere, including the United States. Therefore, anything better than that should boost equity markets. And can things can worse in the United States with regards to the Coronavirus?

The dollar is experiencing significant headwinds, both qualitatively and quantitatively. Investors do not want to hold it, future headwinds like inflation are destined to push it lower, and its only strength is slowly diminishing.

Bearish bets on the dollar are increasing...

Jack McIntyre from Brandywine Global Investment Management stated that "The dollar has been overvalued for a long time, and this might finally be a catalyst for a multi-year downtrend." Furthermore, he said that "As we've seen before when valuations have been stretched, policy or economic shocks can quickly change the currency's trajectory, and that's what it seems to be happening thanks to the Fed's swelling in the balance sheet, a surge in debt, and the way we handled the pandemic."

...However is likely to hold its status as the reserve currency of the world

Liz Young, from BNY Mellon Investment Management, stated that what we're currently seeing in the U.S. dollar ".. is a pullback.." and that "it is a little too extreme to think the dollar is going to lose its reserve status anytime soon."

Bloomberg also stated that investors and traders are currently net short on the currency, with an increase in demand for puts options on the Bloomberg Dollar Spot Index, cementing a sentiment for a bearish trajectory possibly to a level not seen since 2018.

Anish Lal did an excellent technical overview of the trend of de-dollarisation and its effect on other currencies. You can watch it here.

Nonfarm Payroll, RBA Interest rates - Week ahead

Busy week ahead as September kicks in. As New Zealand and the United States elections slowly approach, the Coronavirus pandemic will most likely be the center focus for many parties and how they handle the post Coronavirus world. Here is your week ahead.

Nonfarm payroll this week ahead.

Tuesday, 1st September – Germany's Inflation and Unemployment rate

Like most of Europe, Germany is experiencing an uptick in cases as a reopening of Europe too early takes its toll. However, this has not stopped protesters storming the German Government building in Berlin alongside Germany's total cases ticked over 243,000. With prices of oil slowly increasing, analysts expect inflation to increase slightly by 0.1%. Furthermore, with Germany's unemployment benefit allowing unemployed citizens to claim up to 67% of their previous wage, analysts predict no change in the unemployment rate at 6.4% in the week ahead.

Tuesday, 1st September and Wednesday 2nd September – Reserve bank of Australia Interest Rate Decision and Australia's Year over Year GDP.

Australia continues to fight a hard battle with the Coronavirus, after their original strategy of having no lockdown has lead to massive spikes in Melbourne, Victoria. Australia recorded 123 new cases of the Coronavirus – all in the state of Victoria. Denita Wawn, Master Builders Australia's Chief Executive, stated that "Our industry is facing a blood bath… Private sector investment is evaporating, and the government must step in to save businesses and jobs," conveying how dire the situation is in Australia. However, the Reverse Bank of Australia is expected to hold interest rates at 0.25%. Any deviation from this consensus is most likely to move the Australian dollar significantly. Furthermore, Melbourne's sustained lockdown has seen forecasts of GDP growth to drop to -5.3%, down 6.7% GDP growth of 1.4% in the previous quarter.

Tuesday 1st September – Italy's Markit PMI.

One of the country's worst-hit with the Coronavirus, Italy, has recorded over 268,000 cases with cases continue to spike, with newly registered cases yesterday just over 1,200. Italy is predicted to be one of the first to get a grant from the Bloc's 750 Billion Euro grant as it suffers from worsening GDP growth pre-Coronavirus. Italy is set to release Manufacturing PMI's to 52, slightly higher from 51.9 last month.

Tuesday 1st September – Euro core inflation rate Year over Year

Europe is currently experiencing a resurgence in Coronavirus cases as an early lifting of lockdowns just before Summer has forced a spike across Europe. However, many countries are against a second lockdown due to the Economic calamity it will bring. Analysts predict a drop in the inflation growth rate to 0.9%, down from 1.2% in July.

Non-farm payroll – Friday, 4th September

The United States continues to post daily double-digit Coronavirus cases as their total case count tops 6 Million. As elections approach in just over a month, President Donald Trump continues to let the economy open to win over voters. Non-farm payrolls are predicted to be just over 1.4 million, down from a previous 1.73 million print.

As usual, we have many critical economic events that traders need to watch out for to avoid being whipsawed by the market in the week ahead.

Trade Cautiously.

Interest rates, Non-farm payroll - Week ahead

Coronavirus cases have passed 18 million across the globe, with deaths predicted to surpass 700k by the end of this week ahead. Markets are slowly pricing in how the Coronavirus is affecting countries' respective markets. The US Dollar is down 10% from its March highs, and the ASX is slowly edging down, booking losses three weeks in a row. This is your week ahead.

U.S Dollar Index

Tuesday, 4th August – Australian Retail Sales MoM and RBA Interest Rate Decision

The overarching story with regards to the Australian economy is the current situation in Victoria. They have seen triple-digit gains in Coronavirus cases, with cases jumping to 671 new infections today from 397 just a day before. The Premiere for the state of Victoria, Daniel Andrews, declared a state of disaster as they officially admit that they have lost full control over the virus. However, Daniel has not pushed for total lockdown yet, continuing with strict curfews and restrictions on how far and how many individuals can leave the house. This double-digit jump in infected cases comes when the states' largest city, Melbourne, has been in a stay at home order for the past three weeks. This puts immense pressure on the Premiere to impose mandatory lockdown, like what took place in New Zealand. Education Minister Dan Tehan stated that the federal government would "absolutely" support Victoria in ramping up its measures. The events occurring in Victoria may sway the Reserve Bank of Australia to cut rates even lower this week ahead. The rate currently sits at 0.25%, after a steep cut of 50 basis points from 0.75% at the peak of the Pandemic.

With retail sales jumping for the month of June by 2.4%, it is still seen whether Australia Citizens have been purchasing fewer goods as the Coronavirus ramps up. However, analysts predict a similar growth of 2.4% for the month of July.

Tuesday 4th August – New Zealand Employment / Unemployment Figures

With New Zealand returning to a relatively normal, the effects of the lockdown slowly emerge, especially on the labor market. The unemployment rate was 4.2% in the first quarter. However, many analysts believe that this number was propped up because the government heavily subsidized wages and introduced substantial assistance. Bank of New Zealand Analysts predicts a jump in the unemployment rate this week ahead to 5.9%, with ANZ economists forecasting 5.7%. However, ANZ states that these figures may understate the real weakness in the labor market, saying that "looking ahead, official data will, unfortunately, give a poor steer on the true state of the labor market for a while, due to volatility and temporary policy supports that are delaying job losses."

Wednesday, 5th August – Euro Retail Sales YoY

With the European Union passing a 750 Billion Euro fund to boost their economy, traders and investors are looking out for the continents' retail sales number to identify whether citizens are spending. Analysts at ING predict "a sharp rise.. to be expected before things start to level off." Retail sales are an excellent bearing as to how fast the economy is recovering. However, analysts predict a sharp drop by 5.1% in retail sales Year over Year, with last year's results being a drop in 0.2%.

Thursday, 6th August – Bank of England Policy report, Monetary policy summary, Interest rate Decision, BoE Governor Bailey speech

With Prime Minister Boris Johnson delaying the nationwide lockdown's de-escalation for two weeks due to Coronavirus continuing to ravage the country, he has finally hinted that de-escalation may come in the following weeks. Currently, the United Kingdom has had over 305k confirmed Coronavirus cases, with 46,200 Coronavirus deaths. There is a chance that the Bank of England brings rates below zero; however, they have been reluctant in the past due to concerns over bank profits. Chief economist at Investec, Philip Shaw, stated that interest rate markets were pricing in a 60% chance of a 25 basis point cut to -.15% by June next year. This is an event that will induce volatility within the major GBP pairs, so traders should be aware of the timing of their trades this week ahead if they wish to trade the pound.

Friday, 7th August – Non-Farm Payrolls

Deborah Brix, the physician overseeing the White House Coronavirus response, told CNN that the United States had entered a "new phase" of the Coronavirus pandemic as outbreaks start to increase in rural and urban areas. She states the Pandemic has become "Extraordinarily Widespread." This conveys that the USA is not close to steering clear of the damages the Coronavirus face. Analysts predict a net increase in jobs of 4.8 million for the month of June.

Many important events this week ahead – traders should look out for volatility in the major pairs in the market.

Trade safe!

Anish Lal, an analyst here at Blackbull Markets have some excellent pointers on the GBP/USD pair for the week ahead. You can watch it here.

Interest rates, OPEC, Employment - Week ahead

Many “this week ahead” articles start off referencing the Coronavirus and how it is still front and center of many news and data headlines. However, we all know that, and therefore I felt that I should start this article with something more positive. A federal court of appeal has ruled against Trump and his proposed legislation to allow hunters to kill Yellowstone grizzly bears, stating that they were illegal. Yellowstone Grizzly bears are now officially protected by the Endangered Species Act once again. Here is your week ahead.

Yellowstone Grizzly Bear and its cubs

All dates are in NZDT.

Tuesday, 14th July– UK GDP YOY

As Coronavirus cases approach 300,000 and deaths 45,000, the UK remains in level three since 19th June. At level 4, social distancing measures continues but is short of the most severe level 5, which requires citizens to impose strict lockdown. With citizens roaming around, there has been a spike in Coronavirus cases, forcing multiple pubs to close again. The UK has seen a resurgence in shopping, seeing online and in-person retailers boom with consumer confidence being the strongest it has been since the lockdown. However, with Brexit being in play amidst the Coronavirus, the UK has significant headwinds to overcome before they get firmly on the road to recovery. This is on the back of the UK expected to hit Debt to GDP levels at 100%. Previous UK GDP YOY plummeted to -24.5%

Wednesday 15th July – OPEC Meeting

With oil prices double from their May lows, the cartel has done well, stabilizing prices by inducing deep cuts. At the detriment of US Shale producers, Oil prices have been fluctuating between $40 and $42 for WTI and Brent, respectively, on the back of 9.7 million barrels per day. However, as demand slowly picks up, all eyes are on Wednesday, meeting on whether the cartel decides to ease up cuts to 7.7 million barrels per day. This is a giant exercise of game theory, and it will be a challenge in balancing profitable oil prices vs. attaining market share.

Wednesday 15th July – Bank of Japan Interest Rate decision

Japan has reported just over 21,500 Coronavirus cases and only under 1,000 deaths. With a debt to GDP ratio of 235%, Bank of Japan Governor Haruhiko Kuroda sees interest rates remaining low for the foreseeable future. He stated, “whether it’s the fiscal year 2021 or 2022, I do feel we’re a long way from a situation where we can raise rates.” This is on the bank of the BoJ, increasing their support up to $1 Trillion. Analysts predict interest rates to stay at -0.1% this week ahead.

Thursday 16th July – Australia’s Employment and Unemployment rate

With Melbourne re-entering a six lockdown after the city reporting 191 new Coronavirus cases, criticism on how Australia is handling post lockdown Coronavirus is heightening. With the state of Victoria contributing 24% of Australia’s GDP in 2019, a second lockdown may be detrimental to Australia’s economy and recovery. IBISWorld has stated that “the overall recovery of the Australian Economy is expected to be significantly hindered by the second lockdown.” Analyst predict a job gain of 112,500 and an increase in the unemployment rate to 7.4%, from 7.1%.

Thursday 16th July – Bank of Canada Interest rate decision

Coronavirus cases stand at 108,000, with 8,783 in Canada. With one of the only countries not imposing a mandatory lockdown, Canada has fared relatively better than its border country, the United States. With Bank of Canada Governor Tiff Macklem ruling out negative rates, eyes are on the BoC as analysts predict them being one of the only Central Banks to raise interest rates. Analysts forecast a 50% chance of a rate hike in 2022. However, analysts predict the BoC to keep prices at 0.25% on Thursday this week ahead.

Thursday, 16th July - ECB Interest Rates

As European countries such as Italy and Spain slowly opening their borders to other European countries, the Central bank is in no rush to increase interest rates like their Canadian counterparts. They state that the “Coronavirus crisis is having serious humanitarian and economic consequences” and a “decline in economic activity of almost 9% in the Euro Area in 2020, and around 7% in Germany.” They also state that the economic effects will reach “far beyond the current year.” Analysts predict the Central Bank to keep rates at 0% this week ahead.

Saturday, 18th July – Euro Meeting on Common Recovery Plan

With a proposed €750 Billion recovery package funded by extensive debt, poorer European Countries are hoping to get a lifeline from richer countries as the Coronavirus ravages the continent both physically and economically. This €750b recovery package is on top of a proposed cut to the continents budge to €1.07 Trillion from 1.1 Trillion.

Key earnings are set to be released this week, with banks being the headline

In such turbulent times, investors and traders need to be aware of key news events this week ahead to enter and exit investments/trades at reasonable levels.