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

What to expect with Non-Farm Payrolls March announcement. 21 Feb – 26 Feb, 2022

Will the Non-Farm Payrolls (NFP) move the market this week? Or, has its importance been shifted to the side in the mind of investors and traders, especially as huge new global events draw the world's attention? Of course, I am speaking of the Russian invasion of Ukraine that began at the end of last week and has caused an extreme amount of volatility in the forex, commodity, and stock markets. With no diplomatic resolution in sight, the Russian/Ukrainian war is expected to continue to have an outsized impact on these markets.

Nevertheless, the US Federal Reserve will be watching the NFP figures with interest as they always do and folding the results into its justification to hike interest rates moving forward. As such, investors and traders should be keeping a cursory eye on the values, alongside developments in Ukraine. 

The Federal Reserve is almost guaranteed to hike interest rates in its March meeting, its first in the post-pandemic inflationary environment. What isn't guaranteed is how much the Fed will hike. On the table are 25 basis points and 50 basis points. The NFP may impact the Fed's choice between these two options.

Thursday, March 03:

ADP Employment Change FEB

Leading up to the big NFP data release, we will have the precursor ADP Employment Change report for February to digest.

Last month’s data surprised the market when it reported a cut of 300K jobs in the private sector (vs an expected gain of 200K jobs). This month’s report may rebound with an expected 350K jobs added to the private sector

Saturday, March 05:

Non-Farm Payrolls FEB

Contrary to the ADP Employment Change report, the NFP reported a gain of 470K jobs in January.

The NFP For February is expected to report a 450K job gain. Combining an extraordinary Non-Farm Payrolls beat with other data points regarding the US economy recently might be the impetus the Federal Reserve needs to consider a 50-basis point hike seriously. Alarmingly, US producer prices rose 1% over January, the largest rise over the past twelve months, and lifted US PPI to 9.7% YoY

 

The markets are trying to anticipate whether the Federal Reserve is leaning toward a 25 basis points hike or a 50 basis points for its Interest Rate Decision in March. A rate hike is all but guaranteed, but the exact value of the hike is up in the air. The decision is due on March 16, so there just under a month for investors to analyse the comments of Fed officials and set their positions.

With uncertainty surrounding the Fed’s decision, the USD and US stocks will possibly be in for a volatile ride. Investors will be constantly rejigging their positions as new information presents itself in the lead up to the event. Immediately after the event, trading will likely appear exaggerated.

Who is on the side of a 50 basis points hike?

Earlier in February, rate futures were pointing toward an expectation that the Fed would choose a 50 basis points rate hike to combat 40-year-high inflation in the US.

Remarks from St. Louis Fed President James Bullard was one of the main culprits for this expectation when he called a 50 basis points rate hike in March a "sensible approach". Producer Price inflation hit 9.7% YoY in January 2022, contributing to the market's expectations for an unusually hawkish rate hike.

Is a 25 basis points more likely?

However, expectations for a 50 basis points rate hike have cooled recently. Fed officials have begun pushing back on the probability of a rate hike exceeding 25 basis points out the gate. New York Fed President John Williams recently noted that he doesn't see "any compelling argument to take a big step at the beginning,". Cleveland Fed President Loretta Mester sides with Williams with this assessment but doesn't "like taking anything off the table".

What are you expecting the Fed to do on March 16? Set your position with BlackBull Markets, and trade CFDs, Forex, and individual stocks which are likely to be impacted by the coming decision.

 

Block Inc (NYSE: SQ), the point-of-sale payment provider formerly known as Square, is reporting its Q4 2022 earnings this Thursday, February 24. 

What to expect with SQ stock earnings report?

The usual market dynamic of ‘good report = stock price rise’ and ‘bad report = stock price fall’ may not be entirely appropriate to expect after the report’s release.

As we have seen over the past month, a favourable earnings report does not necessarily mean that the market will respond favourably in turn. For one, when Nvidia (NASDAQ: NVDA) reported its impressive Q4 2022 results on February 16, its stock proceeded to sell-off. As of writing, NVDA is down 12% since its earnings call as investors were all too happy to overlook its earnings beats and strong guidance for the next quarter.

On the flip side, an unfavourable report can sink SQ stock considerably more than at any time in the past. Investors have little patience for growth tech stocks at the moment, with US Federal Reserve rate hikes just around the corner and post-covid revenue surges seemingly coming to an end.

Will SQ suffer a similar fate to PYPL?

PayPal (NASDAQ: PYPL), a leading competitor of Block, reported its own Q4 2021 earnings report three weeks ago, on the first day in February this year. While PYPL beat earnings expectations, its dismal guidance for Q1 2022 has helped tank the stock price 46% in 2022, YTD. 

As of writing, SQ is not far off PYPL’s shocking price retreat. SQ’s stock price has lost 40% of its value, YTD. 

An unfavourable report may push this loss into the 50s or even the 60s. Tech stocks dropping more than 20% in a single trading day is not unheard of this year, as you may have seen Meta Platforms (NASDAQ: FB) trim 25% (USD 230 billion) from its market cap on February 3.

Is there a buying opportunity with SQ stock?

According to several investment banks and analysts, including Deutsche Bank, Credit Suisse, SeekingAlpa and MarketBeat, an even greater rout in the SQ’s share price may set investors up for a great long-term buying opportunity. SeekingAlpha and MarketBeat have price targets in the mid USD 200 range, which represent substantial upside potential.

Sign up today to trade SQ stock with BlackBull Markets

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

What is consumer confidence going to suggest this week? 21 Feb – 26 Feb, 2022

This week will be excellent for gauging consumers' confidence from several critical global economies and their respective general robustness by proxy.

Besides the events detailed below, a quick note should be made on the loan prime rate decision from the People's Bank of China on Monday, which should pull investors' attention. The Chinese 1-year loan prime rate is currently set at 3.7%, and against the trend of most major economies, may still be trimmed.

Wednesday, February 23:

US CB Consumer Confidence FEB
DE GfK Consumer Confidence MAR

Consumer confidence reports from the US and Germany are due on Wednesday.

The CB February report from the US is expected to show that confidence in the robustness of the US economy is shrinking. The main culprit for shrinking confidence is likely to be runaway inflation in the nation and perhaps a distrust in the fed's ability to react with the exact level of aggression needed to tame inflation.

Germany's consumer confidence report is also due Wednesday. The GfK March report is expected to show that Germans are growing in confidence in the economy. While still in negative territory, a rise to -4 from -6.7 points is expected, and with it, a possible boost in the confidence of the EUR over the long term. 

The Reserve Bank of New Zealand's Interest Rate Decision is tucked away between Wednesday's confidence data. Much like the US Fed's interest rate decision due in a couple of weeks, talk concerning the RBNZ's decision centres on whether we will see a rate hike of 25 basis points or 50 basis points.

Friday, February 25:

UK Gfk Consumer Confidence FEB

UK consumer confidence for February will be gauged on Friday afternoon. Like Germany, the UK's Gfk February report is expected to rise 3 points but remains negative as it moves from -19 to -16.

Like the US, inflation in the UK appears to largely drive the negativity in the confidence index. UK consumer confidence has been trending lower the past three months, so a reversal in the index value may be a bullish sign for the British economy and the GBP.

 

Russian de-escalation sharply moving markets

Several equities have reacted sharply over Tuesday trading to the suggestion that Russia is de-escalating its presence on the Russia/Ukraine border.

As reported by Reuters, Russia has begun to move an undisclosed number of its troops away from the Ukrainian border after completing mock defence exercises. Even so, tensions have not entirely dissipated. NATO, US, and UK officials remain cautious of the situation, with Boris Johnson noting that "the intelligence that we're seeing today is still not encouraging".

The markets have been more eager to embrace talk of de-escalation.

European Equities spent Tuesday rebounding sharply. The STOXX Europe 600, which is comprised of 600 stocks across 17 European exchanges, broke a three-day losing streak and rose 1.43%.

On an individual bourse level, the Italian stock market Index, the IT40, led the way back into positive territory, up 2.17% over the trading day. The German (DAX30) and French (CAC40) indices followed closely, each climbing ~1.9%, and the UK's FTSE100 climbed up 0.98%.

US stocks reacted in a similar manner when they opened a few hours after Europe. The US market has recently closed where the NASDAQ rose 2.24%, the S&P500 rose 1.36%, and the Dow Jones rose 1.06%.

Commodities also make significant moves on news that Russia is de-escalating.

Naturally, commodities would be significantly affected by a war between Russia and Ukraine and NATO affiliated nations that have reacted the sharpest.

WTI and Brent have pulled back a shocking 3.7% and 3.4%, respectively. On Monday, Brent oil prices were pushing their way up to USD 100 per barrel after crossing USD 95 per barrel. Before the turnaround in the oil price, talk of USD 110 per barrel was beginning to filter into market predictions.

Russia and Ukraine are two of the largest exporters of Wheat. As such, supply concerns for the soft commodity have eased slightly, and with it, the price has pulled back from its two week high. Wheat is now trading down 2.63% to USD 7.8 per bushel. Low supplies could temper more downside for Wheat in Canada and the US.

Other major exports of the region are trading down on the easing tensions. Corn, Iron Ore, and Soybean are all trading down 2.86%, 1.37%, and 1.27%, respectively.

To trade WTI, Brent, and US Dollar vs Russian Rouble, we welcome you to sign up today.

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

 

Will inflation peak this week?

14 Feb – 19 Feb, 2022

Six significant inflation rate figures will keep investors on their toes almost every day of this week, with the most important data concentrated on Wednesday trading.

Bear in mind the expectations for most of the inflation data figures are strongly suggesting that inflationary pressure has already peaked. So, watch out for deviations from these hopeful expectations.

Tuesday, February 15:

India Inflation Rate YoY JAN

The week opens with India's Inflation Rate YoY to January. The data is released on Tuesday morning, and the market is expecting India's Inflation Rate to rise to 6.0% from the current 5.59%.

The Indian Rupee is trading at a 7-week low against the US Dollar and a 3 ½- month low against the British Pound. The Rupee's weakness so far (and possibly to continue after Tuesday's data release) can be explained, in part, by the Reserve Bank of India less-hawkish stance than the US Federal Reserve and the Bank of England concerning raising interest rates. India's Inflation Rate hitting 6.0% isn't expected to radically alter the Reserve Bank of India's relatively less-hawkish stance.

Wednesday, February 16:

China Inflation Rate YoY JAN

UK Inflation Rate YoY JAN

South Africa Inflation Rate YoY JAN

Expect three inflation rate data releases across Wednesday afternoon that may have the most considerable impact on this week's trading.

In order of appearance:

China's Inflation Rate YoY to January is forecast to fall from 1.5% to 1.00%.

The UK's Inflation Rate YoY to January is forecast to remain flat at 5.4%. 

The direction that South Africa's Inflation Rate YoY to January is expected to head is contentious. The majority of the market expects the South African Inflation Rate to subdue a fraction of a percentage point from 5.9% to 5.7% or 5.6%. However, TradingEconomics is forecasting a rise to 6.0%.

Thursday, February 17:

Canada Inflation Rate YoY JAN

Canada's Inflation Rate YoY to January, released very early Thursday morning, is forecast to remain flat at 4.8%.

Thursday’s result may force investors to reconsider their exodus from the Canadian Dollar last week, as US Inflation hit a 40-year high and expectations for an aggressive US Federal Reserve response heightened.

The same forces could be in play this week but in the opposite direction. The Bank of Canada is on the edge of a more aggressive stance and hotter than expected inflation could essentially guarantee that it enacts its first post-pandemic interest rate increase on March 2.

Friday, February 18:

Japan Inflation Rate YoY JAN

Closing out the week is Japan's Inflation Rate YoY to January, released mid-day Friday. The market consensus is a mild increase to 0.9% from the current Inflation Rate of 0.8%.

As Japanese companies are extremely slow to hike prices, Japan's peak inflation may lag other nations and continue to rise above 0.9% in the ensuing months. For one, the Bank of Japan is expecting inflation to hit 1.1% YoY to April, but still well under the Banks target annual inflation of 2.0%. Consequently, the Bank of Japan is expected to maintain its ultra-loose monetary policy and its -0.1% short term benchmark interest rate for the foreseeable future. 

As such, it might be a shock for the Japanese Yen to improve its position from its 5-year low against the US Dollar.

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

What Will Traders Be Watching This Week?

06 Dec – 11 Dec, 2021

Monday, December 06:

Factory Orders from Germany for the Month of October is the first significant piece of data for the week. The market is expecting a 0.5% decline MoM, in factory orders. The EUR may come under pressure when this data reaches the market, especially when investors consider it in tandem with a recent German IFO Business Survey, indicating diminishing business confidence in the region and further noted “Supply chain bottlenecks are putting companies under real pressure, there is no sign of a let-up.”

Tuesday, December 07:

Possibly adding to downward EUR pressure is the German ZEW Economic Sentiment Index DEC, due Tuesday. The index measures the level of optimism held by analysts concerning economic developments stretching out over the next six months. The ZEW index is anticipated to post a decline of ~5 points to 25.3, from November’s reading of 31.7.

inflation

Wednesday, December 08:

Quiet Wednesday.

Thursday, December 09:

The Bank of Canada’s (BoC) Interest Rate Decision and Rate Statement are released very early Thursday. It will be interesting to see if the BoC will action its bullish rhetoric sooner than next year. However, with oil prices currently under pressure, a hike by the Bank is looking unlikely before April. Importantly, Deputy Governor of the BoC, Toni Gravelle, will speak to the organisation’s Economic Progress Report the following day.

China’s Consumer Price Index (CPI) YoY data to November is due early Thursday afternoon. Last month, China’s CPI accelerated sharply from 0.7% to 1.5% as producers passed on rising costs. Producer costs have risen 13.5% since October 2020, the fastest pace in 26 years. As such, analysts are again expecting a steeper incline for November CPI data. Market forecasts have China CPI hitting 2.5%.

inflation

Friday, December 10:

Mexican Inflation Rate data YoY to November will be posted just after the clock ticks over to Friday. Mexican inflation is anticipated to record its fourth month of increases and possibly pass the 7.00% threshold. The Central Bank of Mexico, while believing inflation to be transitory, might respond with another rate hike when it convenes the following week to dampen inflation expectations leading to persistent inflation. The Mexican Peso spent much of last week strengthening against the USD, so the market may have priced this in already.

Saturday, December 11:

The US gets the last word this week. Its Inflation Rate YoY to November is anticipated to follow Mexico’s, creeping up to ~7.00%, from 6.2% the previous month. This forecast proving true could strengthen the Federal Reserve’s resolve to speed up its bond-buying taper and possible move forward the schedule of interest rate hikes.

The price of oil dropped 13% on Friday (26/11/21), marking the commodities worst single day in 2021.

A drop in oil prices this large was last seen in January/February 2020, when WTI was making its way down to unprecedented negative per barrel territory. No one expects oil to veer this low again, but the comparison to 2020 is apt, with Coronavirus responsible for the commodity's downfall on both occasions.

price of oil

New Coronavirus variant discovered in South Africa

An effort to lower the price of oil had begun before the new Coronavirus strain, named the Omicron variant, appeared.

Led by the US, a strategic release of Oil reserves was being enacted or considered by members of the International Energy Alliance (IEA) in an attempt to lower the price of oil, which they saw as hampering their respective economic recoveries.

It has been claimed that the strategic release would have little effect on the oil price, as the quantity to be released is half of the world's daily consumption. Yet, oil has fallen from its 2021 highs of US ~$85 per barrel since the announcement.

In response, OPEC+ was said to be reconsidering its plan output increase to counter the strategic reserve release by the US and its IEA allies. The OPEC+ rumours helped plug some of the losses oil was experiencing, but not enough to stop consistent weekly losses in the commodity's price. By Friday, oil had rung up five weeks of straight price decreases.

Is the Omicron threat overshooting the fair price of oil?

The Omicron variant is possibly the worst coronavirus variant known, as reported by the BBC. However, uncertainty exists as to how vaccine resistant, virulent, and deadly the strain is compared to its predecessors. As such, countries quickly moved to restrict travel from South Africa, reminiscent of January/February 2020, when international travel came to a screeching halt, and the price of oil fell from US $63 per barrel to sub-zero.

Countries that have placed travel restrictions on South Africa (and other African nations) include the US, the UK, and Germany.

As of writing, WTI is trading at US $68.16 per barrel, as mentioned above, 13% lower than Thursday's price.

Two questions come to mind:

  1. Has the market reacted too severely to the threat posed by Omicron?
  2. Can the strategic release of oil by IEA nations now be halted or pared back?

Regarding the former, Goldman notes that Omicron should have only warranted a ~6.5% drop in the price of oil and that the commodity should quickly recoup some of Friday's dip.

Regarding the latter, it might not be too late to turn this tap off. IEA nations have pledged to release as much as 80 million barrels of oil, with 50 million of these barrels coming from the US. However, a genuine commitment from IEA members has yet to be agreed upon, with discussions still underway as of Friday.

After tanking many equities at the end of last week, the new coronavirus variant out of South Africa will likely be of primary interest to investors leading to the end of 2021. Nonetheless, the show must go on, and several vital data reports from the world’s major players are released this week.

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

What Will Traders Be Watching This Week?

29 Nov – 04 Dec, 2021

Monday, November 29:

Quiet Monday.

Tuesday, November 30:

Freshly re-elected Federal Reserve Chair Jerome Powell is scheduled to speak (pre-recorded) on Tuesday morning. However, Powell won’t touch on US inflation, interest rates, and bond-buying issues. Investors might glean more critical information from the speeches of Fed representatives Richard Clarida (Vice-Chair), John Williams, and Michelle Bowman, who all speak Tuesday morning.

The Europeans Union’s Inflation Rate YoY for November is released Tuesday night. A rise from 4.1% the previous month to 4.5% is expected. Even so, It would be a shock for the European Central Bank to pull away from its ultra-accommodative stance in reaction.

Wednesday, December 01:

We are graced with another Fed Chair speech on Wednesday. This speech should be more closely watched than Tuesday’s.

Powell will testify before the US senate in a speech tilted Coronavirus and CARES Act. It will be interesting to see if Powell’s tone on the transitory nature of inflation has changed to match that of US Treasury Secretary Janet Yellen.

Thursday, December 02:

Closing the week will be employment data from the US. First up is the US ADP Employment Change for November. ADP employment is forecast to rise by more than 500K, marking a third straight month of such rises if actualised.

Friday, December 03:

Quiet Friday.

Saturday, December 04:

The November Unemployment Rate and Non-Farm Payroll (NFP) are released early Saturday morning. A value in the Mid-500K is expected for NFP, while Unemployment is expected to fall one percentage point to 4.5%.

With employment being a more significant factor for the Fed under Powell’s tenure than previous Chairs, a solid report should help strengthen investors current understanding of the Feds position and timeline on rate hikes and tapering.

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).