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Week ahead – United States Election!

With over 93 Million US Citizens voting early, surpassing two-thirds of all 2016 and consisting of 43% of registered voters, the United States election is finally two days away this week ahead. Many regard this as one of the most important Presidential Elections in history, possibly changing society's fabric in the United States for the foreseeable future.

Although the Presidential Election will probably get most of the attention, this week continues to be eventful with a lot of data being released. Here is your week ahead.

Dates are in NZDT.

FiveThirtyEight predicts in 20 out of 22 scenarios Biden will win the Presidency

Monday, 2nd November – US ISM Manufacturing

A key point in Trump's campaign in 2016 was his promise to bring jobs back to America. However, an amended NAFTA agreement, alongside many more amendments to foreign policy, has lost many manufacturing jobs. For example, over one in four Michigan manufacturing jobs have been lost since the NAFTA agreement amendment.

The Coronavirus has just brought more pain to the sector, with an estimated 381,000 manufacturing workers in Michigan, Ohio, Wisconsin and Pennsylvania were laid off or furloughed – with all, but one (Pennsylvania) states being in the midwestern part of the USA. These states were one of the key reasons why Donald Trump was elected in 2016.

As states slowly open up, the Coronavirus continues to run rampant, affecting workers employed in the manufacturing sector. Unlike the tech and finance sector, manufacturers can not work from home. With that said, the US's ISM is predicting to increase slightly from last month to 55.6 this week ahead, as suppose to 55.4 last month.

Tuesday, 3rd November and Wednesday, 4th November – RBA Interest Rate decision and Australian Retail Sales

Australia reached a positive milestone yesterday – zero community transmission. The country has a long road to recovery ahead of them, and the Reserve Bank of Australia acknowledges that. With dovish tones in the previous RBA minutes, analysts predict a 150 point basis cut, from 0.25% to 0.1% tomorrow. However, Insight Manager at Finder, Graham Cooke believes that further cuts will not make dramatic changes to the finances of ordinary Australians, stating that "a further 10-15 point basis cut us unlikely to have much of an impact on the economy –however, our experts seem to think that the RBA is in "every little bit helps" mode."

Furthermore, Retail Sales will also be released a day after the decision. Analysts predict a further 1.5% decline in Retail Sales as the Coronavirus continues to take a longer-term toll on employment.

Wednesday, 4th November – US Presidential Election.

The event everyone and I mean everyone, including your mother, will be watching.

There is nothing much to say about this other than to buckle in. Many polls state that Biden is likely to win. FiveThirtyEight predicts that in 20 out of 22 scenarios, Biden is stated to win. Other polls from firms such as RealClearPolitics see Biden leading over 9%.

Judging by the polls, the only way Trump can win is if he wins all of the swing states. The popular vote in NYC and California have Biden to win anyways, which means the popular vote will be absorbed within the Electoral college (tl:dr, the RealClearPolitics poll may be closer than is stated).

However, the polls showed Hillary winning in 2016. And we all know what happened then.

Friday, 5th November – Bank of England Interest Rate Decision

The UK struggling with lackluster leadership

The UK has finally imposed a stricter lockdown (however, not a full lockdown) on citizens for one month, with analysts predicting that the lockdown may be extended further to allow the UK to have their Christmas not under lockdown. The Bank of England is set to inject over 100 Million pounds buying back bonds to fight the second wave.

However, this may not be enough, with analysts at HSBC predicting that the BoE's bond-buying regimes are "running out of room," which may leave the central bank with no choice but to implement negative rates. Governor of the Bank of England, Andre Bailey, has not ruled negatives rates but has described evidence of their effectiveness as "pretty mixed" and that negative rates might be most effective when an economy is in a recovery phase for the economy to take full advantage of the negative rates. Analysts predict rates to stay at 0.1%.

Saturday, 5th November – US Non-Farm Payroll

A key indicator showing how well the US economy is recovering, Non-farm payrolls is predicted to print 700,000 new jobs, up from 661,000 the month before.

This week ahead is going to be a turbulent one. Strap yourself in, and brace for the ride.

Stay safe, Trade safe. Have a good week!

Prime Minister of Japan, Shinzo Abe resigns

Prime Minister of Japan, Shinzo Abe is set resign to after worsening health conditions.

The Japanese Yen sold off against the US Dollar on the news

Shinzo Abe, 65 years old, has been battling Ulcerative Colitis, a chronic digestive condition that also forced him to step down as Prime Minister in 2006-2007. During the announcement, the Japanese TOPIX pulled back with the Japanese Yen strengthening against the U.S. dollar by 0.5%.

Abe + economics = Abenomics

When Abe took the role of Prime Minister, he quickly started economic reforms, which promptly coined the term “Abenomics” by economists. His economics was an attempt to help pull the country out of the GDP slump Japan were in. Before Abe was nominated in 2012, Japan's nominal GDP was the same in 1991. Deflation was also on the rise due to the increase in the aging population not willing to spend money. After a year he was elected, the stock market rose 55% alongside an approval rating of 70% at the time.

Abenomics focused on looser monetary policy, fiscal stimulus, and structural reform – most famously, implementing negative interest rates alongside quantitative easing. Immediate effects were seen, with a weakening in the Japanese Yen boosting exports and an increase in the stock market alongside a decrease in unemployment. Between 2012 and 2016, the Japanese Yen depreciated against the U.S. dollar by 50%.

It is uncertain who will take Abe’s spot. Shigeru Ishiba, the former defense minister, is regarded as the best pick from voters as he has backed economic policies more populist that Abe’s when Japan is seeing a rise in a populist movement. Other potential candidates include Finance Minister and Deputy Prime Minister Taro Aso, and Chief Cabinet Secretary Yoshihide Suga can take over Abe’s role.

With the Coronavirus creeping back up in Japan, Shinzo Abe’s resignation comes at a time where political insatiability will come as a burden to a full recovery of an already declining economy from the Pandemic.