The week is packed with end-of-month and start-of-month activities, including testimonies before the Federal Reserve and Bank of England, etc.! ~ Highlights and schedule for the week of February 25 ~

Last week's USD/JPY was a range-bound week as attention centered on the weekend remarks from key figures. Although expectations were high, the content was only so-so. Consequently, the week ended with an extremely narrow trading range.

What moved significantly was the Australian dollar on China-related news, which fell sharply. Resource currencies were notably volatile during the week. I think statements and information related to coal in China may continue. A personal, somewhat cynical view: statements about coal imports might be China’s retaliation or pushback. I also wonder if the pushout of Huawei and ZTE from 5G networks and the U.S.–China trade talks could have been aimed at U.S. allies...!? That’s what I’m thinking.

◎ This Week’s Focus

1) U.S.–China Trade Talks

Trade talks between the U.S. and China continue through the 24th. They have not yet reached an agreement, but there appears to be gradual progress. However, it seems the Chinese and American expectations may differ, making it hard to find a landing point.

For now, China aims to reduce the U.S.–China trade deficit by increasing imports and to win U.S. agreement by considering a currency clause. In particular, they would prefer not to touch issues related to intellectual property or state-owned enterprises.

The United States will, of course, press for everything. Therefore, if no agreement is reached next week, will tariffs be raised? Or will the negotiating deadline be extended? I think there are two options. This week’s central focal point. I will be watching the headlines closely.

2) UK Parliament and Brexit Negotiations

Brexit negotiations between the UK and the EU have been delayed for so long. With a summit in the Middle East on the horizon, Prime Minister May intends to press in during the interlude, but progress seems unlikely. As the Brexit deadline approaches, all eyes remain glued.

1. Submission and Vote on the Withdrawal Plan

On the 26th, Prime Minister May will present the withdrawal plan again to Parliament. Several amendments are expected, with a vote in Parliament on the 27th. The aim is to finalize the withdrawal plan in the UK. First checkpoint: can the withdrawal plan (withdrawal amendments) be passed?

2. Prime Minister May’s Position

There is increasing pressure on May to resign. Some MPs have already defected. If Parliament cannot unite and pass the measure this week, calls for May to take responsibility will intensify.

3. Future Decision-Making Process

If this week’s vote does not settle the matter, there are talks of shifting from government-led to Parliament-led decision-making. If Parliament leads, May’s position could be severely weakened. If Parliament-led decisions become the norm, it would be a historic development. Worth watching.

※ Reference: DMM Salon “FX Style”
http://lounge.dmm.com/detail/1215/

4) EU Reactions

Despite all this focus, even if the UK votes repeatedly and drafts withdrawal plans, the EU has stated it will only recognize a withdrawal agreement by the end of November. Regardless of whether the UK vote passes or fails this time, the EU stance remains unchanged. EU reactions are also worth watching.

3) FRB Officials’ Remarks and Congressional Testimony

This week features the semiannual testimony by the Fed Chair before Congress. The attention is high, but the chances of surprise outcomes are believed to be low. The current policy stance is expected to continue. Rate hikes and balance-sheet reduction are likely to be hinted at as being paused or gradual. If a surprise statement occurs, there could be significant moves. In addition to congressional testimony, numerous speeches by key figures are scheduled, but content is expected to resemble last week’s remarks.

4) BOE Monetary Policy Testimony

The Bank of England also has a scheduled testimony before Parliament this week. The UK’s economy and outlook depend heavily on the timing and terms of Brexit. Therefore, the focus is more on Brexit negotiations than on policy content. With Prime Minister May’s remarks scheduled the same day, those are likely to attract more attention. Nevertheless, it is important to keep track of the monetary policy content as well.

5) U.S. Budget

The debt ceiling is approaching. As always, it is expected to be raised at the last moment; however, in the worst case, a default could become possible. I will be paying close attention over the weekend.

◎ This Week’s Economic Calendar

February 25 (Monday)

06:45 NZD Retail Sales

19:00 GBP Carney speaking at BOE

23:00 MXN Mexico GDP

February 26 (Tuesday)

May Parliament Brexit Plan Testimony

01:00 USDLael Brainard FRB Vice Chair Speaking

01:30 USD 2-year Note Auction

03:00 USD 5-year Note Auction

16:00 EUR Germany GIF Consumer Confidence

18:30 EUR Lane, Ireland Central Bank Chief Speaking

19:00 GBPCarney BOE Governor, Ramsden BOE Deputy Governor, Briah External BOE Directors, Haskell External BOE Directors Parliament Testimony

22:00 HUF Hungary Policy Rate Announcement

22:30 USD Existing Home Sales

February 27 (Wednesday)

UK Parliament Brexit Plan Vote

U.S.–North Korea Summit

00:00 USD Consumer Confidence

00:00 USDJerome Powell, Fed Chair, Senate Testimony

03:00 USD 7-year Note Auction

06:45 NZD Trade Balance

09:30 AUD Building Permits

10:30 JPY Kanda Panel Member (BOJ Board) Speaking

16:00 NOK Norway Unemployment Rate

19:00 EUR Eurozone Consumer Confidence

22:30 CAD CPI

February 28 (Thursday)

U.S.–North Korea Summit

00:00 USDJerome Powell, Fed Chair, House Testimony

00:30 USD Crude Oil Inventories

09:01 GBP UK GfK Consumer Confidence

10:00 CNY China Manufacturing PMI

10:30 JPY Suzuki Panel Member (BOJ Board) Speaking

15:45 CHF Swiss GDP

16:00 GBP House Price Index

16:45 EUR France GDP

17:00 EUR Spain HICP (CPI)

17:30 SEK Sweden GDP

19:00 EUR Italy HICP

22:00 EUR Germany HICP

22:00 USDLael Brainard, Fed Governor Speaking

22:30 USDU.S. GDP

22:30 CAD Current Account

22:50 USD Atlanta Fed President Sprecher Speaking

March 1 (Friday)

U.S. Tariff Enforcement Against China Deadline

U.S. Debt Ceiling Increase Deadline

01:00 USD Patrick Harker, Philadelphia Fed President Speaking

03:00 USD Randal K. Quirk, Dallas Fed President Speaking

06:45 NZD Building Consents

07:30 AUD Manufacturing PMI

10:15 USDJerome Powell, Fed Chair Speech

10:45 CNYCaixin Manufacturing PMI

16:15 EUR Spain Manufacturing PMI

16:30 SEK Sweden Manufacturing PMI

17:00 NOK Norway Manufacturing PMI

17:45 EUR Italy Manufacturing PMI

17:50 EUR France Manufacturing PMI

17:55 EUR Germany Manufacturing PMI and Unemployment Rate

18:00 EUR Italy Unemployment Rate

18:00 EUR Euro Area Manufacturing PMI

18:30 GBP UK Manufacturing PMI

19:00 EUR Euro Area HICP (CPI) and Unemployment Rate

22:30 USD PCE Deflator

22:30 CADCanada GDP

23:45 USD Manufacturing PMI

March 2 (Saturday)

00:00 USDISM Manufacturing Index

00:00 USD University of Michigan Consumer Confidence

02:50 USD Dallas Fed President Speaking

03:00 USD Baker Hughes Rig Count