Platforms

BlackBull Markets provides you with the world-renowned MetaTrader 4. Download it on the platform you prefer. Find out more.
Virtual Private Servers
VPS TradingNYC ServersBeeksFX

About us

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

After waging war against Ukraine that triggered a humanitarian crisis as well as skyrocketing oil prices that fueled global inflation concerns, Russia has been hammered with a series of sanctions by Western governments in an attempt to weaken its economy.

Foreign nations have slapped economic sanctions on Vladimir Putin's government and among the most sweeping sanctions are efforts to cut Russia’s access to the global financial system.

Russian banks have been barred from using the Society for Worldwide Interbank Financial Telecommunications (SWIFT) payment system that connects banks in 200 countries and regions to more than 11,000 financial institutions globally.

Washington and its European allies have also moved to cut off the Russian central bank from overseas transactions, further restricting Russia’s ability to use its international reserves to fund the war.

The cost of Putin’s war

The actual cost of the Ukraine invasion on Russia may be far less than the magnitude of damage on Ukrainians, although it has definitely taken a toll on Russians as wars are expensive.

A recent study by Ukraine-based think-tank Center for Economic Recovery estimates that an almost 100-hour full-scale invasion cost the Russian economy $7 billion in direct losses including $2.7 billion of potential GDP loss in the next 40 years.

If the war drags on, Russia might have to bank on its reserves to continue funding its military.

How much foreign reserve does Russia have?

As of mid-February, before Russia started to invade Ukraine, the country had amassed $643 billion in international reserves, according to the Bank of Russia. But with the unprecedented sanctions imposed on the Russian central bank, much of the country’s foreign exchange reserves have been rendered useless.

Russian central bank assets held in US banks have also been frozen and financial institutions outside the US that hold dollars for the central bank will be unable to transfer the assets.

With the restricted access to the US dollar, Russia may be prompted to use its gold reserves to support its deteriorating economy. The central bank earlier this week suspended purchases of gold from banks amid increased demand from households, which the Bank of Russia attributed to the cancellation of value-added tax on consumers’ gold purchases. The central bank did not disclose when it will resume buying gold from banks.

Russia had built more than $130 billion worth of gold as of the end of January, accounting for about 22% of its reserves, data from the central bank showed.

A large portion of Russia’s foreign currency and gold reserves are kept in China, France, Japan, Germany and the US as of mid-2021, according to a now unavailable report by the Bank of Russia that was archived by Wayback Machine. Russia and China are seen as de-facto allies, making it easy for the Kremlin to recover its gold from Asia’s largest economy.

Targeting Russian gold to cripple Kremlin

However, with no signs of Putin backing down from the war, US lawmakers are now targeting Russia’s access to its gold. A bipartisan bill was introduced last week, aiming to apply sanctions to any American entities that transact or transport gold from Russia’s central bank or sell gold physically or electronically in Russia.

"Russia’s massive gold supply is one of the few remaining assets that Putin can use to keep his country’s economy from falling even further,” US Senator Angus King, one of the bill’s authors, said.

Acknowledging the Ukraine conflict’s impact on the Russian economy

Putin has acknowledged that the Russian economy had suffered a setback from the war, saying in televised remarks on Wednesday that Russia "will have to make deep structural changes in our economy.”

"I will not pretend that they will be easy or that they will not lead to a temporary increase in inflation and unemployment.”

On Sunday, International Monetary Fund Managing Director Kristalina Georgieva told CBS's "Face the Nation" program that Russia may default on its debts, triggering a deep recession in its economy this year.

The Russian ruble fell to 105.45 against the US dollar on Thursday.

Sign up to BlackBull Markets today to trade gold

News of Alphabet (NASDAQ: GOOGL) and Amazon's (NASDAQ: AMZN) upcoming stock splits has caused excitement for retail investors, shifting the focus from soaring inflation and fuel prices, while some traders are already speculating the next mega-cap stock to split as exceptionally high-value companies seek to make their shares more affordable for mom-and-pop investors.

Why are Alphabet and Amazon splitting stocks?

Google and YouTube’s parent Alphabet, and e-commerce behemoth Amazon have become two of the world’s most valuable companies and also among the priciest stocks.

On Feb. 1, Alphabet said it is performing a 20-for-1 stock split, giving 19 additional shares to shareholders on the record date of July 1, with the split expected to take effect on July 15. The move comes about eight years after Alphabet last split its stock.

Amazon followed suit on, announcing on March 9 that its board has approved a 20-for-1 stock split, its first since the dot-com boom in 1999 and its fourth since it went public in 1997. Assuming that the plan gets shareholder approval on May 25, the tech giant will issue 19 additional shares for every one share on May 27, with trading on the new stocks scheduled on June 6.

Who will be the next large-cap to announce a split?

With two of the Silicon Valley giants eyeing a split in the coming months, the focus is now on the next company to enact a split. Markets are closely watching Tesla (NASDAQ: TSLA) after the electric carmaker’s share price reached the $1,000 mark nearly five months ago. Tesla carried out a 5-for-1 stock split in August 2020 when its share price surged past $1,000.

Tesla’s split came around the same time that Apple (NASDAQ: AAPL) also launched a 4-for-1 stock split. An Apple stock split this year, however, may appear unlikely as the company’s stock is only trading at around $150, well below its $502 share price when it carried out its split in 2020.

Chipotle Mexican Grill (NYSE: CMG), currently trading above the $1,000 mark, is another potential stock that could split as the company has yet to carry out a split since its IPO in 2006. As of Tuesday, Chipotle’s shares have more than tripled over the last five years to $1,494.

AutoZone (NYSE: AZO), which hit the $2,000 mark in December, could likewise pursue a split as the last time it did was in April 1994. Even with the absence of a split for nearly three decades, the automotive parts company has carried out a number of share buybacks.

Booking Holdings (NASDAQ: BKNG), trading near $3,000, could also carry out a split. The company’s high share price could be partly attributed to a reverse stock split it enforced in 2003 when the travel services provider, formerly known as Priceline, issued one share for every six shares held by investors.

Broadcom (NASDAQ: AVGO), Shopify (NYSE: SHOP) are two other candidates for a stock split, with their share prices settling at above $500 recently.

Can you take advantage of a stock split?

As with any investment, it is critical to conduct a risk assessment before you dive in. The low stock prices may help you build a position in a formerly high valued stock that will now be available to a broader set of investors. Demand may also rise, further boosting a company’s share price following the split.

Sign up to BlackBull Markets today to trade major US stocks

The US Federal Reserve kicked off its Federal Open Market Committee (FOMC) meeting on Tuesday, with the markets widely anticipating a 25 basis-point hike in what would be the first interest rate increase since 2018.

Fed Chair Jerome Powell had earlier raised the prospect of a 25bp hike, telling a House financial services committee hearing two weeks ago that he is "inclined to propose and support” the increase as inflation has sat above 2% and as the United States’ labor market continued to recover.

High inflation underscores need for tightening

With the US consumer inflation soaring to a 40-year high of 7.9% in February, a rate hike this week is highly anticipated, although uncertainty lies in how much the Fed will have to tighten to tame inflation. Markets are also pricing in up to six or seven hikes this year, one for each of the upcoming FOMC meetings.

Higher inflation expectations among US consumers, according to surveys by the New York Fed and Cleveland Fed, also ramp up the likelihood of a more hawkish Fed.

US Inflation

50bp hike also on the table

Although many market watchers anticipate a 25bp hike when the Fed caps off its meeting on Thursday, some economists say a 50bp is also likely. Last month, St. Louis Fed President James Bullard called for a full percentage-point hike by July 1.

ING Bank’s Chief International Economist James Knightley in a note last week said it wouldn’t be surprising “to see maybe two FOMC members vote for 50bp.”

Knightley and other economists from the Dutch bank most recently said markets are back to pricing 160bp hikes in six meetings in total for 2022, although the Fed may have five rate hikes planned for the year.

Russia-Ukraine war places Fed in a precarious spot

However, the worsening conflict between Russia and Ukraine, which has reached its third week, puts the Fed on alert due to expectations that the war could worsen inflation and result in a potential global economic recession that could derail the United States’ recovery momentum.

Still, the Fed appeared to be undeterred by the crisis, with Powell saying in a recent speech to Congress that the near-term effects of the war and Western sanctions on Russia remain highly uncertain.

"Making appropriate monetary policy in this environment requires a recognition that the economy evolves in unexpected ways. We will need to be nimble in responding to incoming data and the evolving outlook,” Powell said.

Squeezing household income

A rate hike in the US — the first since the COVID-19 pandemic emerged — could further squeeze household income at a time when gas prices hover around record highs. Gasoline prices in the US surged to an all-time high of $4.33 on Friday, before retreating over the weekend, according to data from the American Automobile Association.

Higher interest rates will raise borrowing costs in banks, lifting variable rates on credit card debt and affecting interests on auto loans and mortgages. This could further weigh on consumer’s spending habits.

Sign up to BlackBull Markets today to trade the FOMC

The worsening oil supply shortage in the wake of the Russian invasion of Ukraine has sent pump prices to record highs in recent weeks, sparking fears of a catastrophic global oil crisis and soaring inflation.

Despite these concerns, the Organization of Petroleum Exporting Countries (OPEC) and other non-OPEC oil-exporting nations, a global oil cartel known as OPEC+, are still holding back on boosting production, downplaying the impact of the conflict on global oil supply and demand and stressing that the current market volatility is triggered only by geopolitical developments.

Why are oil prices high?

Economic sanctions imposed against Russia have caused oil importers overseas to turn down Russian oil as "no one wants to be seen buying Russian products and funding a war against the Ukrainian people,” a New York Harbor trader was quoted by Reuters as saying earlier this month.

Even when not many countries use Russian oil, pump prices have surged in recent weeks as the absence of millions of barrels of Russian oil from the global supply chain prompted importers of Russian crude like Europe to seek the commodity elsewhere such as from OPEC countries like Saudi Arabia. These leaves other traders scrambling to secure supply.

How OPEC plays into the issue

OPEC members — including Saudi Arabia, the United Arab Emirates and Venezuela — account for about 40% of the world’s crude oil production and 60% of petroleum traded globally, according to the US Energy Information Administration

In 2020, as demand for oil plummeted when most countries were under lockdown, OPEC+ agreed to a deal with former US President Donald Trump to slash nearly 10 million barrels of oil per day, or close to 10% of the global oil output. The world’s top exporters eventually started beefing up production by 400,000 barrels a day since August 2021 as economies reopened.

Most recently, with the Russia-Ukraine war threatening a global oil supply crunch, the focus has again turned to OPEC+ to ramp up output. However, the group in its recent meeting on March 2 — about a week since Russia started invading Ukraine — reaffirmed its commitment to only increase its crude oil output by 400,000 bpd.

“It was noted that current oil market fundamentals and the consensus on its outlook pointed to a well-balanced market, and that current volatility is not caused by changes in market fundamentals but by current geopolitical developments,” OPEC+ said in a statement.

UAE pushes for increased output

Yousuf Al Otaiba, the UAE's ambassador to Washington, last week said the country “favor[s] production increases and will be encouraging OPEC to consider higher production levels.” The statement caused oil prices to fall at most in two years on Thursday, with Brent crude futures falling 13.2% at $111.14 a barrel, the biggest one-day drop since April 21, 2020.

Prices have continued to fall on Monday, with Brent prices falling to $107.59 a barrel for May contracts and WTI crude slipping to $103.42 for April contracts.

Oil prices have also retreated on expectations that some producers may accelerate production.

Will OPEC+ boost output?

In late January, prior to the Ukraine conflict, the EIA had predicted a nearly 2.7 million bpd increase in OPEC’s oil output this year, the largest year-over-year jump in production since 2004.

Energy research firm Rystad Energy most recently estimated that Saudi Arabia, the UAE, Iraq and Kuwait can bring about 4 million bpd of spare capacity into the market within three to six months, potentially easing the crisis. However, that amount still falls short of Russia’s 7 million bpd in oil exports, according to Reuters.

In an interview with Bloomberg News last week, OPEC’s outgoing general secretary Mohammad Barkindo said there is "no physical shortage of oil” amid the Ukraine crisis, adding that the physical market supplies are guaranteed.

Barkindo’s statement underscores the OPEC+’s likelihood of only beefing up production once signs of a supply crunch become more imminent. One factor that could prompt the cartel to yield to calls to accelerate output is the potential for a demand destruction. Oil demand may soon peak and decline when retail fuel prices become relatively expensive and as the prices of other consumer goods skyrocket.

The transition to renewable energy sources and the shift to new-energy vehicles may also cause oil demand to weaken, especially as Western countries and other economic giants like China accelerate their climate action targets.

The potential end to the Russia-Ukraine dispute could likewise stabilize oil prices and encourage OPEC+ to boost output as global supply chains and activities resume, although the likelihood of this happening in the near term is relatively slim as Western countries have refused to directly intervene over fears of wide-ranging “consequences” from Vladimir Putin.

Sign up to BlackBull Markets today to trade Crude Oil

allbirds stock

Allbirds (NASDAQ: BIRD), the New Zealand footwear company, was listed on the Nasdaq in November 2021 at a starting price of US $21.21 and found a range between US $20 and $30 for one month.

Its mission to create the world's first carbon-neutral shoe brand appealed to investors, perhaps those of the ESG persuasion, who have pushed a record US $650 billion of funds into ESG project in 2021. As noted by the Financial Post, Allbirds mentioned the word "sustainability" 112 times in its IPO filing.

Starting December 2021, up to the time of writing, BIRD stock has plummeted to US $5.99, and its market cap has reduced to US $4 billion from US $900 million. While the company has been performing admirably, as per its quarterly report released on February 23, BIRD's stock price has flown south for the winter, as it's caught up in the same winddown experienced by many other of its growth stock brethren.

Growth stocks fall out of favour

Over the past few months, investors have generally turned against growth stocks ever since it became apparent that the US Federal Reserve would be hiking interest rates to combat the countries inflation that is famously at a 40-year high.

Allbirds is firmly in the category of a growth stock and a unique growth stock at that, as its typically eco-conscious customers return less frequently to the Allbirds checkout aisle. This means its growth strategy and attempt to build brand awareness has to be particularly aggressive.

As such, Allbirds is ploughing its cash flow and cash reserves into gaining more customers, opening brick-and-mortar stores, and expanding its apparel range. The company is projecting revenue of US $360 million in the 2022 financial year, a big lift in revenue over 2021, but still expects to make a loss of approximately US $11 million. Interestingly, it should be noted that about US $8 million of this shortfall is attributed to compliance costs associated with becoming a public company.

Even though Allbirds may bootstrap its growth expenses with its cash flow and reserves, it does have US $40 million available under a revolving credit agreement. The cost of borrowing capital moving forward, should it need to meet its aggressive growth strategy, may become increasingly costly in line with the US Federal Reserve's interest rate hikes.

Want to buy or sell Allbirds stock? Sign up to BlackBull Markets today

wheat futures

Fears of the impact of Russia-Ukraine war on global inflation and recession have escalated in recent weeks and another major issue looming over the horizon are concerns that the conflict could result in a hunger crisis as both countries account for over a quarter of the world’s wheat exports.

Wheat prices recently surged to a 14-year high, with the price of a bushel of wheat soaring more than 50% to $12.94 on Monday since the Russian invasion of Ukraine began. The price movement on Monday hit the Chicago Board of Trade’s limit for another day.

Reliance on Russia and Ukraine wheat exports

Russia and Ukraine are two of the world’s largest exporters of wheat, accounting for about 30% of the global total. In 2019, Russia was the world’s top wheat exporter, while Ukraine came in fifth next to the US, Canada and France, according to data from the Observatory of Economic Complexity.

The disruption in both countries’ grain harvest and trade could have catastrophic impacts on their biggest buyers in the Middle East including Egypt, which depends on Ukraine’s wheat imports to produce subsidized bread to its poor population and other staples.

These fears intensified on Wednesday after the Ukrainian government said it will ban exports of key agricultural goods like wheat, corn, salt, meat and oilseeds to maintain market stability in Ukraine and “meet the needs of the population in critical food products.

Looming food shortage

Many nations rely on Ukraine and Russia for grain and oilseeds and the crisis could exacerbate the supply of food especially at a time when low-income countries are still reeling from the COVID-19 pandemic.

Some economists have warned that the war could lead to a repeat of the Arab Spring in the past decade when social unrest and armed rebellions led to soaring food prices.

"The fallout from Ukraine will spread across the globe. Russia and Ukraine together export 30% of the world's wheat. As this war heats up, many countries will face: soaring food prices, catastrophic hunger & growing instability,” David Beasley, the head of the United Nations World Food Program said.

Farmers in Russia and Ukraine are tipped to reduce their planting area in the coming seasons as the war intensifies, placing the pressure on other exporters to boost production.

China, India, US work to fill in the gap

Although Russia and Ukraine’s grain trade have not been technically included in sanctions imposed by Western countries, many importers have turned to other sources like China, India and the US to make up for any shortfalls, according to ING Bank, over fears of supply disruptions.

“We would expect to see strong plantings from US farmers over the spring, leaving the potential for an increase in US spring wheat, corn and soybean area,” ING’s head of commodities strategy, Warren Patterson, said in a note on Monday.

Volatility in wheat markets

The lingering crisis in Ukraine has caused wheat prices to be highly volatile in recent weeks as countries work to ensure grain imports to feed their population. The CBOT soft red winter wheat, KC hard red winter wheat and MGEX spring wheat all reached their daily trading limits for another day on Tuesday, while US wheat futures snapped a six-day winning streak the same day.

Investors have been hesitant in making big position moves for the second week in a row last week despite the market volatility, Reuters said.

In the week ended March 1, commodity funds axed only 11,000 futures and options contracts from their CBOT wheat net short, down from estimates, the news outlet reported earlier this week, citing data from the US Commodity Futures Trading Commission.

"Huge speculative interest has flowed into wheat that may have pushed futures past reasonable levels… The export market is difficult to define with many countries banning exports and tenders being canceled,” CHS Hedging was quoted by Bloomberg News as saying.

Ready to trade wheat futures? Sign up to a demo or live trading account with BlackBull Markets today

The looming collapse of China Evergrande Group (HKG:3333), the world’s most indebted property developer, has roiled financial markets for months, threatening a contagion with far-reaching implications on China and the wider economy.

In the early months since Evergrande’s financial crisis came to light, Beijing stayed mum on the issue, although the People’s Bank of China pumped billions of yuan in liquidity in what was seen as an attempt to quell liquidity concerns.

Over this time, Evergrande’s stock price slipped 95%, from ~25HKD to ~1.5HKD, where it has stagnated for all of 2022.

HKG:3333 W1

Evergrande’s massive debt pileup

Evergrande, once China’s second-largest real estate developer, is drowning in more than $300 billion in debts to suppliers, contractors, creditors and investors. The company’s crisis partly stemmed from the introduction of Beijing’s "three red lines" rule in 2020 that made it harder for developers to seek bank financing to fund their projects.

Another Lehman Brothers moment

The large exposure of Chinese banks like Minsheng Bank, Ping An Bank and Everbright Bank to Evergrande prompted many financial watchers to predict that Evergrande's debt crisis could extend beyond China’s property and financial markets, warning that it could spill over to the global markets similar to the Lehman Brothers collapse that resulted in the 2008 global financial crisis.

These fears intensified as Evergrande missed payments on a number of onshore bonds. The world’s three major credit rating agencies have already declared the developer to be in default after missing on its bond interest payments late last year.

However, some analysts have played down concerns of Evergrande being the next “Lehman moment,” as they expect Beijing’s policymakers to prevent the crisis from being a systemic risk.

Beijing steps in to limit fallout

To minimize the potential impact of Evergrande’s looming collapse, Beijing has stepped up its efforts, but without a state-led bailout in sight. Back in October, the Chinese central bank said the risk of Evergrande’s liabilities spilling over to the country’s financial sector is "controllable,” while confirming reports that relevant government agencies and local governments have been carrying out risk disposal and resolution work to mitigate a potential contagion.

In recent weeks, a number of news outlets reported that some banks in China have lowered mortgage rates, offered subsidies and allowed developers to access their funds on escrow in an attempt to revive the housing market.

Beijing also started urging state-owned developers to acquire some projects of troubled builders to help ease the sector’s liquidity crunch. Fitch Ratings recently said Chinese developers are poised to see more small-scale mergers and acquisitions and the impact on buyers’ leverage are predicted to be small "as they select projects with promising returns."

Light at the end of the tunnel

It may take months or years for the property sector to recover as developers continue to struggle with a cash crunch that prevents them from meeting their debt obligations.

However, with Beijing’s subtle approach in reviving the property market, Evergrande’s recovery may be drawing near. In February, new home prices in 100 cities in China rose for the first time in two months, further recovering from the slump in November when prices contracted for the first time since 2015.

Policy reforms could encourage home-buying this year as the government included the healthy development of the real estate sector in its government work report unveiled by Premier Li Keqiang over the weekend. Li said authorities will seek to promote the commercial housing market and stabilize house prices this year.

Foreign investors that purchase bonds and other securities from Chinese builders should closely monitor developments surrounding Beijing’s policies for the sector.

With the Russian ruble sinking to fresh lows and global companies exiting the market, forecasts of a looming collapse of the $1.7 trillion Russian economy have grown since the Kremlin launched its military attacks on Ukraine less than two weeks ago.

The Russian currency fell by more than 10% from Friday to 137 to a dollar on Monday, underscoring the impact of the sanctions imposed by Western nations on the Russian economy and on residents’ living standards.

In 2021, the country’s gross domestic product rose 4.7% year over year, boosted by the global economic recovery and the global surge in the prices of oil, one of Russia’s key commodities. GDP rebounded last year — after contracting 2.7% in 2020 — to the fastest since the 2008 global financial crisis.

Russia GDP

Worst recession in three decades

But with the developments surrounding Russia’s war with Ukraine, many economists are predicting a recession that could be worse than the 1990s in the aftermath of the Soviet Union’s collapse. Analysts at JP Morgan expect Russia’s GDP to shrink 11% this year, sharper than the 5.3% contraction in 1998 after the country’s debt crisis.

Russia’s economic crash of 1998 was triggered by a drop in productivity, the high exchange rate between the ruble and foreign currencies, and the government defaulting on its domestic debts.

Financial watchers are now projecting another 1998-like scenario as Russia is poised to miss its debt deadlines after being cut off from virtually the entire global payments system and losing customers on its key commodities like oil.

Russia in state of default

“Investors are questioning Russia’s willingness to pay. Hence there has been an exodus, especially as Russian debt is also on index-watch,” ING Bank economist Padhraic Garvey said in a note last week, adding that the Russian dollar bond curve is now priced "as if in a state of default.”

Russia on Sunday said its payments of sovereign bonds will depend on sanctions imposed by Western governments, sparking fears of a technical default on the country's debts.

Uncertainties spur corporate boycott

The mass exodus of global companies from the Russian market is also expected to weigh on the economy as companies attempt to safeguard their staff from the conflict and to support international measures to isolate and disarm Russia.

Companies from the automotive, aviation, technology, consulting, media, retail and energy sectors have already disclosed plans to either suspend operations or exit the Russian market entirely in a form of protest against Vladimir Putin’s decision to wage war on Ukraine and due to uncertainties in doing business in the market.

Consumer goods and services firms including PayPal (NASDAQ:PYPL), Ford Motor (NYSE:F), Volkswagen (FRA:VOW), Toyota Motor (NYSE:TM), Boeing (NYSE:BA), Airbus, Diageo (NYSE:DEO), Apple (NASDAQ:AAPL), Samsung Electronics (KRX:005930), Walt Disney (NYSE:DIS) and Netflix (NASDAQ:NFLX), as well as oil majors BP (NYSE:BP), ExxonMobil (NYSE:XOM) and Shell (NYSE:SHEL) are among the companies that have decided to sever their ties with Russia.

Wooing foreign firms to stay

In an attempt to retain its relationship with foreign companies, Russia on Friday offered fast-tracked bankruptcy protections and the option for firms to hire local managers to manage their stakes in the country until they choose to return.

"To enable businesses to make informed decisions, a draft presidential decree has been prepared to introduce temporary restrictions on exiting Russian assets… We expect that those who have invested in our country will be able to continue working here,” Russian Prime Minister Mikhail Mishustin was quoted as saying by state news agencies TASS and RIA.

Eroding living standards

Putin’s actions are also predicted to result in hyperinflation, elevated unemployment levels and social unrest. To mitigate the global sanctions’ impact on the local currency, the Russian central bank in an emergency move last week hiked its key interest rate to 20% from 9.5% as it prepares for hyperinflation.

With many foreign companies choosing to discontinue their operations in the country, Russians are now preparing to cover the costs of the war as they face worsening unemployment figures and skyrocketing consumer prices.

Oxford Economics’ chief global economist Innes McFee last week said Russia’s unemployment rate will likely rise by 1.9 percentage points in 2023, while inflation is predicted to soar to 20%, eroding residents’ quality of living. The country’s GDP is predicted to contract 11% in the fourth quarter of 2022 as Russia is tipped to suffer the worst economic impact from the war, McFee said.

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

This week, the most important economic events are split between the US and China. Inflation data from these countries will be at the forefront of traders' minds as they set their positions this week.

Wednesday, March 09

China Inflation Rate YoY FEB

China's Inflation Rate YoY for February is due on Wednesday afternoon. 

China's YoY inflation rate has decreased dramatically over the past three readings, falling from 2.3% in November 2021 to 0.9% in January 2022.

Now inflation in the country is far lower than the People's Bank of China (PBoC) mandated range and may even head lower in the February result. The market consensus is for inflation to fall ten basis points to 0.8%.

Such a reading would provide the PBOC with more reasons to continue loosening its monetary policy. PBoC's Governor Yi Gang expects to take such action, noting last Wednesday that the bank anticipates that it will "increase support for key areas and weak links in the economy".

China CPI

Thursday, March 10

JOLTs Job Openings JAN

The Jolts Job Openings report for January is released on Thursday early morning.

Job numbers in the US have floated around 10 to 11 million for the past 7-months. The January Job number is not expected to be any different. Market consensus forecasts no change in this month's report, with 10.9 million jobs that labour participants in the country have not filled.

The JOLTS report follows last week's Non-Farm Payroll (NFP) for February, which beat market expectations by a wide margin. Last Friday, the NFP recorded that the US economy added 680K jobs, versus an expected 400K jobs. February's report was the greatest in seven months.

Friday, March 11

Inflation Rate YoY FEB

ECB Interest Rate decision

A cursory note should be made that the European Central Bank will be making an interest rate decision on Friday. This event only requires a cursory note because of the extreme dovishness that the ECB has taken regarding the EU inflation (5.8% in February). As such, the market believes that the ECB won't move the interest rate from its current 0% per annum and deliver non-committal commentary.

Otherwise, the more significant event on Friday will be the US inflation rate YoY for February.

Currently, inflation in the US is at a 40-year high, at 7.5% YoY. The market thinks that inflation will hit 7.9% in February's reading.

The US inflation rate will inform the US Federal Reserve’s interest rate decision on March 15/16. A strong inflation number puts pressure on the Central Bank to consider a 50 basis points moving forward. A rising probability for a 50 basis points move will likely move the dial in US equities, gold, and USD pair markets.

US CPI

 

The US Non-Farm Payrolls (NFP), a major market mover, is being released at 8:30 am EST, Friday, March 05, and covers the month of February.

The market consensus is that the US added 400K jobs to the economy last month. For comparison, the ADP Employment Change report (released Wednesday) reported that private businesses added 475K workers to their payrolls in February.

While a 50 basis points hike from the US Federal Reserve during its March 15/16 meeting is unlikely, a strong jobs report could put pressure on the Central Bank to consider it moving forward.

An increasing possibility for a 50bps in the Federal Reserve’s subsequent April and May meeting will likely filter into the markets for US equities, gold, and USD pairs. As for the Federal Reserve’s March meeting, Jerome Powell, Chair of the Reserve, indicated on Wednesday that he favours a 25 basis point hike in March.

US equities

In February, US equities were beaten down as investors priced in the impending Federal Reserve rate hike. Over the past month, the NASDAQ100 has fallen 4.5%, the SPX has fallen 3%, and the Dow Jones Industrial Average has fallen 3.5%.

However, all three major US indices have been in positive territory over the past five trading days, with some analysts believing that the stock market has already bottomed out. Citi Group, for one, has upgraded their view on US stocks, thinking that they may get a bump from the Ukraine crisis, noting that US equities “have ended 10-20% higher after previous geopolitical crisis”.

NASDAQ100, SPX, DJIA D1

Gold

Over the past two weeks, the price of gold has been at the mercy of developments with the Ukraine crisis. XAUUSD quickly shot up to $1,970 after the crisis broke out before returning to $1,900, where it stagnated for a week.

Another major market event is entering the picture to help shake the gold price from its trenches. The March Non-Farm Payroll (NFP) is fast approaching, and with it, gold has found a new home close to $1,930.

XAUUSD 4H

The USD

A risk-off market has supported the USD against several of its pairs in the lead up to the NFP. In particular, The EURUSD is trading at a 22-month low and is trending to below 1.100. The RSI indicator on the EURUSD may provide some comfort for EUR bulls in the face of a possible strong NFP report, as the pair appears over-sold.

EURUSD W1