Is the risk-off phase continuing?! Attention on U.S.–China trade talks! ~ Highlights and schedule for the week of February 11 ~
Last week was a risk-off week as talks between the U.S. and China on trade failed to reach an agreement, concerns about China's economic slowdown, expectations of an Australian rate cut, and global stock market declines weighed on sentiment. Will this week continue that trend? Here are the key points summarized.
◎ This Week's Key Points
1) U.S.-China Trade Talks
The U.S.-China trade talks have not yet reached an agreement. If no deal is reached by March, additional tariffs on China will be enacted. Existing tariffs already have significant impact, and further tariffs could push risk-off sentiment even further.
This week, U.S. Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin are slated to visit China, with minister-level trade talks planned for the 14th and 15th. Whether an agreement can be reached here is the biggest point of attention.
2) Oceania Currencies
At last week’s RBA board meeting, worries about a rate cut led to a sharp sell-off of the Australian dollar, and the New Zealand dollar weakened significantly due to deteriorating NZ employment. This week, the RBNZ is scheduled to announce its policy rate. A hold is the consensus, but if the statement or press conference hints at a rate cut, further downside could follow.
3) Brexit Negotiations
Prime Minister May is negotiating with the EU over the withdrawal agreement that was voted down on January 29. Both the UK and the EU want to avoid a no-deal Brexit. However, the UK desires renegotiation, while the EU says renegotiation is not possible. There is also disagreement on the withdrawal deadline: the UK wants to leave on March 29, while the EU favors extending the deadline.
This week, another House of Commons vote is planned in the UK, but if May’s negotiations with the EU do not progress, it is unclear whether a vote will take place. With Brexit negotiations remaining opaque, headlines could move markets significantly. Therefore, pay attention to statements from UK and EU officials.
◎ This Week’s Key Events Schedule
February 11 (Monday)
Euro Area Finance Ministers Meeting
Lighthizer (USTR) and Mnuchin (Treasury) visit to China planned
16:00 NOK Norway CPI
16:30 CHF Switzerland CPI
17:00 EUR Draghi/ECB Vice President
18:30 GBP UK GDP and Trade Balance
22:30 CAD Trade Balance
February 12 (Tuesday)
09:30 AUD Housing Mortgage Rates, Housing Investment, NAB Business Confidence Index
20:00 USD OPEC Monthly Report
February 13 (Wednesday)
05:00 NZD RBNZ Policy Rate and Statement
06:00 NZD RBNZ Press Conference
08:30 USD Mester / Cleveland Fed President Speaking
08:30 AUD Westpac Consumer Confidence Index
09:30 USD George (Cleveland Fed President) Speaking
10:00 NZD RBNZ Policy Rate Announcement
11:00 NZD RBNZ Governor Press Conference
17:05 EUR Lane (Finland) Central Bank President Speaking
17:30 SEK Sweden Policy Rate Announcement
18:30 GBP CPI
22:30 USD CPI
22:50 USD Bositis/Atlanta Fed President Speaking
22:50 USD Mester (Cleveland Fed) Speaking
February 14 (Thursday)
U.S.-China ministerial–level trade talks
00:30 USD Crude oil stocks
04:00 USD Monthly Budget Statement
16:00 EUR Germany GDP
18:30 GBP BOE External MPC Member Speaking
19:00 EUR Employment Change & GDP
22:30 USD Retail Sales
February 15 (Friday)
U.S.-China ministerial–level trade talks
US Budget Deadline
US debt repayment and interest payment
05:45 AUD Kent RBA Deputy Governor Speaking
06:30 NZD PMI
10:30 CNY China CPI
17:00 EUR Spain HICP
18:30 GBP Retail Sales
19:00 EUR EU Trade Balance
22:30 USD Retail Sales
23:55 USD Bositis/Atlanta Fed President Speaking
February 16 (Saturday)
00:00 USD University of Michigan Consumer Sentiment
03:00 USD Baker Hughes Rig Count
