A sense of direction elusive for the FRB; will the FOMC minutes reveal a clear direction?! ~ Key points and schedule for February 20 ~
Yesterday, after entering the New York market, dollar selling continued and the dollar weakened across the board. However, because the yen was sold about the same amount, the USD/JPY remained in a range.
Conversely, the pound rose sharply. I think the talks between Prime Minister May and European Commission President Juncker contributed to this, but I’m not sure what the real reason is. Personally, I don’t think talks with Juncker will resolve the problems.
Was yesterday’s movement the start of a risk-on phase!? Today is the 20th, will the half-month factor also have an impact!?
◎ Today’s Points of Attention
1) FOMC Minutes
I’m watching what discussions were held about rate hikes and balance sheet reduction. If the minutes show further progress on rate hikes or the reduction of the balance sheet, stock prices could fall again. A stock decline tends to lead to dollar weakness and yen appreciation, so this warrants attention.
If the FOMC minutes indicate progress on rate hikes or balance sheet reduction, there is a possibility of another stock sell-off. A stock decline is likely to lead to dollar weakness and yen strength, so pay attention.
2) U.S.–China Trade Talks
In yesterday’s U.S.–China talks, the U.S. side conditioned participation on China including provisions to stabilize the yuan. While criticizing currency manipulators, the U.S. seems to be including currency provisions in trade talks with the countries involved. Will a U.S.–China trade agreement be reached? Will currency provisions be included? This is noteworthy.
3) Brexit Plan
Today, talks between Prime Minister May and European Commission President Juncker are scheduled. When this news came out yesterday, the pound rose. It seems expectations have grown from the May–Juncker meeting, but if no agreement can be reached, will it lead to a disappointment sell-off? Or is it that the market is buying the pound assuming no agreement is possible? This is worth watching.
Furthermore, if the May–Juncker talks yield even one concrete agreement, another upward move in the pound might be possible. I’d like to keep an eye on the headlines.
◎ Today’s Economic Calendar
Wednesday, February 20
May–Juncker meeting (Brussels)
U.S.–China trade talks
16:00 EUR – Publishes remarks by ECB Executive Board member Benoît Cœuré
Thursday, February 21
00:00 EUR – Euro-area Consumer Confidence
03:10 USD – Remarks by Kaplan, President of the Dallas Fed
03:30 USDRemarks by Brainerd, President of the Federal Reserve Bank of St. Louis
04:00 USDFOMC Minutes Release
09:30 AUDEmployment Change and Unemployment Rate
◎ Weekly Schedule
