Post-Chinese holiday, what will happen to US-China relations!? – Highlights and schedule for February 11 –

Last week, risk currencies were sold off, with a focus on Oceania currencies. In the euro area, political issues in France and Italy and concerns about economic slowdown led to euro selling, and due to the uncertainty around Brexit, the pound was sold off and there were no currencies being bought, so the dollar had to be bought. It was that kind of weekend.

This morning, when Tokyo is closed, there was a flash crash in francs that seemed aimed at stop hunting. From the start of the week, it’s been noisy.

◎Points of focus for today

1) U.S.-China trade talks

With Lighthizer (U.S. Trade Representative) and Mnuchin (U.S. Treasury Secretary) planning visits to China, attention is on the U.S.-China trade talks. A deterioration in U.S.-China relations → China's economic slowdown → risk-off → declines in Oceania currencies could affect many areas, so attention is high. I don’t think there will be an immediate agreement today, but we should watch for statements from key figures regarding progress.

Also, China will move after the holidays. In the morning, we should watch China’s movements as well.

2) Brexit negotiations

Negotiations with Prime Minister May and the EU are underway to seek renegotiation of the withdrawal agreement.

As the British Parliament vote on the 14th approaches, will there be any agreement?!

Or will it remain deadlocked with nothing decided?!

We will also pay attention to headlines and statements from key figures. Fundamentally, if some agreement can be reached, I think the pound would rise. Conversely, if language suggesting a no-deal Brexit emerges, the pound would fall, but I don’t plan to trade unless there is confirmation.

3) European economic and political concerns

Relations between Italy and France are being reported. In Italy, there is a rise of the far right, and in France, Macron’s popularity is falling amidst ongoing protests, with problems at home in both countries. Additionally, there are concerns across Europe about an economic slowdown. The euro/dollar is approaching the lower end of its range, but I don’t feel a rebound is likely from here. Fundamentally, I think this could be a downside break this time. Therefore, I am focusing on Italy, France, and the European economic slowdown.

◎Today’s economic calendar

February 11 (Monday)

Euro area Finance Ministers’ Meeting

Lighthizer (USTR) & Mnuchin’s planned visit to China

16:00 NOK Norway CPI (Consumer Price Index)

16:30 CHF Swiss CPI (Consumer Price Index)

17:00 EUR De Guindos ECB Vice President speaks

18:30 GBP UK GDP and Trade Balance

22:30 CAD Trade Balance

23:00 USD Knoot (Knott) - Netherlands Central Bank President speaks

February 12 (Tuesday)

01:15 USD Bowman FOMC Member speaks

09:30 AUD Housing Loans, Housing Investment, NAB Business Confidence Index