Today's event: three highlights! ~ Highlights and schedule for February 26 ~

Yesterday, a risk-on sentiment unexpectedly pushed the yen lower. It was truly unexpected... Today, with many big events scheduled, I didn’t expect drastic moves. Risk-on is affecting not only the yen but also other currencies in the Oceania region.

Also, after President Trump expressed concerns about rising crude oil prices, crude prices fell. The Canadian dollar was sold.

◎ Today's Points of Focus

1) Powell’s FOMC Chairman Testimony

The testimony by the Fed Chair is scheduled for two days, on the 26th and 27th. Powell’s remarks have the image of wavering between hawkish and dovish. In his recent remarks he was dovish, which lowered the probability of a rate hike this year, with an 80% odds baked in for keeping rates unchanged for the year. Therefore, if today’s testimony touches on the possibility of a rate hike this year, there is a potential for a large market move.

There is a possibility of buying on expectations of a rate hike, but stock prices are a concern. The Fed’s tightening policy has been a factor in stock-price declines. Recently, thanks to a dovish stance, stocks rose and returned to high levels. If, in this context, he touches on hawkish signals again, stock prices could deteriorate. Whether there is more buying pressure from rate-hike expectations or selling pressure from falling stock prices will determine whether the move in currencies is bullish or bearish. It only applies if he tilts hawkish...

Also, the testimony is scheduled to start at 00:00, but historically, a prepared text is often released before the testimony. If released in advance, there is a higher likelihood of moves at that time. If the time becomes known, I’d like to tweet about it on Twitter.

2) Bank of England Parliament Testimony

Parliamentary testimony is also scheduled in the UK. This involves multiple members, and the focus is thought to be on the economy and Brexit-related issues.

What is happening with the UK economy recently? Since Brexit, the pound has weakened and prices have risen. Also, consumer spending has cooled due to future uncertainty. It remains to be seen how far economic activity is impacted. Also, in terms of the economy, concerns over production cuts or withdrawals by Nissan and Honda, and whether other countries' companies are reducing production or withdrawing, are being watched for Brexit’s outlook and its impact on corporate activity.

Additionally, I want to pay attention to how the BoE will act after Brexit. Will it move to raise rates? Lower rates? Or pursue additional easing? I’m watching for differences between a negotiated Brexit and a no-deal Brexit to see how they might differ a policy response.

3) Risk Events

Currently, two risk events are in focus: the UK Brexit negotiations and US-China trade talks. Both are proving difficult to reach agreements on and have announced postponements. As a result, the market initially reacted with risk-off sentiment. However, since these are only postponements, any reports of progress may trigger risk-on, while reports of a breakdown could trigger risk-off again. I will be watching the headlines of the negotiation talks.

◎ Today’s Economic Calendar

Tuesday, February 26

Prime Minister May — Brexit vote in Parliament

16:00 EUR Germany Consumer Confidence Index

18:30 EUR Lane – ECB President Lagarde’s Speech

19:00 GBPCarney, Governor of the Bank of England; Ramsden, Deputy Governor; Bruegel External Members of the BoE; Haskel, External Member — UK Parliament Testimony

22:00 HUF Hungary Monetary Policy Rate Announcement

22:30 USD New Housing Starts

Wednesday, February 27

UK Parliament Brexit Vote

US-North Korea Summit

00:00 USD Consumer Confidence

00:00 USDPowell, Fed Chair — Senate Testimony

03:00 USD 7-Year Bond Auction

06:45 NZD Trade Balance

09:30 AUD Building Permits

10:30 JPY Katayama, Board Member (BOJ) Remarks