A day with numerous remarks from leaders such as Trump, Powell, and Quarles — Highlights and schedule for February 6
Yesterday, the Australian dollar was bought heavily and the pound was sold heavily. With a monetary policy announcement, the AUD was driven higher by the content of the statement. Conversely, with one of the forward-looking economic indicators, the services PMI, results were weak, prompting pound selling, and the situation has seen pound selling accelerate due to the uncertainty surrounding the Brexit deal.
Hidden behind the AUD and the pound, the euro is also being steadily sold due to weak economic data.
◎ Today's Highlights
1) Congressional Address
Typically, the Congressional Address would have been delivered last month, but it was postponed due to conflicts with the Democratic Party and a government shutdown. The President's goals and policies for this year will be announced. Personally, I think President Trump will strive to implement his promises no matter what. What will be said in the Congressional Address, and what he intends to execute this year are points to watch.
Additionally, since the government shutdown and the budget proposal are temporary, they will expire on the 15th. A new budget agreement will be required, with the budget negotiations likely to hinge on the wall funding at the Mexico border.
2) Lowe RBA Governor Speech
The AUD rose significantly yesterday, and today Governor Lowe is scheduled to speak. Attention will be on whether there is any shift in policy stance given recent weak economic data and the possibility of rate cuts (probabilities). A summary of yesterday's statement and key points about the RBA is provided below.
AUD Rise, RBA Policy Rate and Statement
3) Speeches by Key Figures
In addition to the Congressional Address and Governor Lowe's remarks, there are many speeches planned by important figures such as Powell, Quarles, and Lane of the BOC. In particular, the Fed is looking for direction after the FOMC. Will it move toward easing or is it still in tightening mode? This is something to watch closely.
4) Brexit Negotiations
Yesterday, pound selling began with weak services PMI, and the view that the EU would not accept renegotiation and that the March 29 Brexit would stand, increased Brexit uncertainty, accelerating pound selling. Going forward, there is likely to be a chicken race over whether the UK or the EU concedes first regarding a no-deal exit. If the chicken race accelerates, uncertainty will rise and pound selling could continue, but if either side concedes and a deal (other than no-deal) is reached, there could be a rebound in the pound. To time movements, this chicken race deserves close attention.
Moreover, this week features "Super Thursday," when the BOE policy rate and the Inflation Report will be released, scheduled for Thursday. This is also worth watching.
◎ Today’s Economic Event Schedule
Wednesday, February 6
10:30 AUDLowe RBA Governor Speech
Around 11:00Trump’s Congressional Address
22:30 USD Trade Balance and Retail Sales
22:35 CAD Lane BOC Director Speech
Undecided USD GDP, PCE Deflator, Durable Goods Orders
Thursday, February 7
00:00 CAD Ivey PMI
00:30 USD Crude Oil Inventories
03:00 USD 10-year Bond Auction
04:00 USD Monthly Budget Statement
06:45 NZDNonfarm Payrolls and Unemployment Rate
08:05 USDQuarles, Fed Vice Chair Speech
09:00 USDPowell, Fed Chair Speech
09:30 AUD NAB Quarterly Business Confidence
◎ Weekly Schedule
