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Based out of Auckland, New Zealand, we bring an institutional trading experience to the retail market.
Mark O' Donnell
 · 
Research Analyst
June 22, 2018
 · 

BlackBull Bulletin - 22 June 2018

 

 

Big News this week

 

This is the Start of Global Trade War!?

 

If you have been following our twitter feed or our weekly bulletin, you will already know about President Trump’s plan to impose tariffs on Chinese imports. Here’s what has happened in the past week:

 

►June 15 – President Trump declared the United States would impose a 25% tariff on $50 billion of Chinese imports, the tariff will take effect on July 6.

►June 16 – Beijing announced its retaliation with 25% tariffs on $34 billion of U.S. goods.

►June 18 – President Trump ordered additional 10% on another $400 billion of Chinese imports China retaliate against the U.S tariffs announced on June 15 or if intellectual policies and related issues are not addressed.

 

Investors in China panicked as 1,023 Chinese stocks fell by 10% on Tuesday. However, the Chinese government remained calm as Chinese Public Bank of China Governor, Yi Gang, posted on the PBOC Q&A page stating, “The selloff was mainly driven by sentiments.” He is positive with the economic state of China stating, “The fundamentals of the Chinese economy are sound. The growth has become more resilient…”

 

China is not the only country been hit by U.S. tariffs recently. How are other countries reacting to the U.S. tariffs?

 

►The European Union triggers the first phase of retaliation against the U.S. over the metal imports. 25% duty on $3.2 billion of U.S. imports has received final approval from the European Commission in Brussels. The tariff along with a separate 10% applied to U.S. playing cards will take effect on 22 June. There might also be a second-stage retaliation of levies ranging from 10% – 50% on an extra €3.6 billion of American Goods.

►According to the Canadian Department of Finance, tariffs will be imposed on $16.6 billion Canadian on imports of steel, aluminium, and other U.S. products. Steel will be subject to 25% tariff, whereas aluminium and other U.S. products will be subject to 10% tariffs. The tariffs will take effect on 1st July unless the U.S. eliminates restrictive trade measures against Canada.

 

The question for the U.S. "Are the tariffs really putting 'America first'?"

 


Bank of England Holds Rates at 0.50%

 

On 21 June, the Bank of England announced their interest rate decision followed by their Monetary Policy to meet the 2% inflation target. A majority vote of 6-3, the Bank of England decided to maintain Bank rates at 0.50%. The committee also voted unanimously to maintain the corporate bond purchases of £10 billion and UK government bond purchases of £435 billion.  The GBP strengthened last night as GBP/USD gained 86 pips in 1 hour after the announcement.

 

 


The OPEC Inner Conflict

 

The next 24 – 48 hours will be significant for the oil price in the upcoming months ahead. Saudi Arabia and its allies estimate that total production cuts now amount to 2.8 million barrels (1 million barrels over the initial target). A decision on whether the OPEC will agree to 1 million barrels per day will bring the group back to target. However, because most countries can’t increase production, that would probably translate to just 600,000 barrels.

 

What’s the conflict?

 

Saudi Arabia is under pressure from President Trump to unwind some of the cuts by boosting supply in the second half of the year. On the other hand, Iran cannot benefit from the increase in supply as the production boost will be a green light for the U.S. to sanctions against itself. Any decision from the meeting will have a significant impact on the oil price in the second half of the year

 

 


Other Important Events

 

►On 20 June, the British government passed the Brexit bill with a close vote of 319 to 303. The scheduled departure from the European Union is on Friday, 29 March 2019.

 

►Nor Shamsiah was announced to be the new Central Bank Governor of Malaysia.

 

►Bank of Japan Governor Haruhiko Kuroda endorsed the Japanese government call for a 3% wage raise per year. The 3% wage increase will help the central bank to meet its 2% inflation target

 

 


Up-Coming Events

 

►The OPEC members and Russia are starting their meeting today at Vienna. Decisions on whether to lift the output cap after the 18 months of tightening will significantly impact the price of crude.

 

►Big week in the release of economic indicators. GDP for the U.S. and the U.K. are set to release on Friday, Business and Consumer Confidence indicator are set to be released by the European Union, Japan, and the U.K.

 

►The General European Council meeting is set to start on 28 June and will last for two days. The agenda for the meeting is on migration, economy and finance, security and defence, Brexit, and the Euro Summit.

 


Video of the Week

 


This information is subject to change without notice. BlackBull Markets strives to provide the most accurate information available, but cannot guarantee that any of these events will occur nor that the outcome will be as stated. This information is to be used for educational purposes only and further research should be done before trading.

BlackBull Markets is the trade name of Black Bull Group Limited Ltd which is a registered Financial Service Provider in New Zealand with FSP No. 403326. Black Bull Group Limited registered New Zealand Company is listed on New Zealand Financial Service Provider Register (#FSP 403326) and is also a member of the Financial Dispute Resolution Service FSCL.

Risk Warning: Trading foreign exchange on margin carries a high level of risk and may not be suitable for all investors. The high degree of leverage can work against you as well as for you. Before deciding to trade foreign exchange you should carefully consider your investment objectives, level of experience, and risk appetite. The possibility exists that you could sustain a loss of some or all of your initial investment and, therefore, you should not invest money you cannot afford to lose. You should make yourself aware of all the risks associated with foreign exchange trading and seek advice from an independent financial adviser if you have any questions or concerns as to how a loss would affect your lifestyle.


 

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