Before the EU Summit starts!! Will it be the third vote on the exit plan? ~ Key materials and events schedule for the week of March 18 ~

Last week drew attention to a vote in the UK Parliament, and many thought it would be a historic day, but when the dust settled, the result aligned with consensus: an extension of the Brexit deadline. The pound swung widely, but is once again in wait-and-see mode. This week, all eyes are on whether the EU summit will mark a historic day.

Meanwhile, as central banks around the world shift to a more dovish stance, the Bank of Japan's Monetary Policy Meeting was held. While some expected additional easing, policy was kept unchanged. This week, four central banks are scheduled to announce policy decisions.

◎ This Week’s Highlights

1) Brexit and EU Summit

Last week in the UK Parliament, votes including amendments were held. Prime Minister May's Brexit bill was defeated, stopping a no-deal Brexit and deciding to extend the withdrawal deadline to June 30. However, any extension of the withdrawal deadline requires unanimous consent from all EU member states. From EU leaders' remarks, a few oppose the extension, or oppose it unless there is a justified reason. At the EU summit on the 21st–22nd, it will be decided whether an extension is possible.

Additionally, domestically in the UK there is a mood that a third vote on the withdrawal bill might occur. Even after the three days of votes last week, discussions continue, and debates seem to focus on legal opinions by Attorney General Cox that contributed to the bill's defeat. If the content and opinions shift, some MPs might back the bill. In particular, if the DUP in Northern Ireland backs it, some hardline Conservative MPs may also lean in support. There are concerns that, as things stand, the EU summit could reject any extension, leading to a no-deal Brexit; some speculate that a version closer to the Prime Minister May's plan might be preferable and could gain support. Rumors suggest the third time could be the charm for May's withdrawal plan.

With the EU Summit starting on the 21st, the third vote, if any, would have to take place by the 20th. So the window is April 18–20. In the UK, Sunday tends to bring notable political moves, so attention is on Sunday the 17th for any developments. For three more days, watch the UK actions. Also, depending on what proposal the UK brings to the EU Summit, observers will watch the responses of EU member states. The historic day that did not happen last week is expected to occur somewhere this week.

2) Monetary Policy Announcements

This week includes policy announcements from the FOMC, Switzerland, the UK, and Norway. Switzerland and the UK are expected to hold rates steady. Norway is anticipated to raise rates by 0.25%.

The focus is on the FOMC. After the previous FOMC signaled a pause in rate hikes and a shift to a dove, attention centers on what conditions would resume hikes. Also, with balance sheet reduction, questions remain whether it will end within the year or continue, even at a small pace, and whether a restart will occur; the outlook for monetary policy is under close watch.

Therefore, pay close attention to the statement and the press conference.

3) U.S.-China and U.S.-North Korea Relations

Last week, reports that U.S.-China trade talks were postponed to April sent risk sentiment lower. Issues with ZTE and Huawei also loom in U.S.-China relations. Additionally, North Korea has resumed missile warnings, possibly triggered by the collapse of the U.S.-North Korea summit. These relations could influence risk sentiment, so monitor them carefully.

◎ This Week’s Economic Event Schedule

March 18 (Monday)

08:50 JPY Trade Balance

19:00 EUR Trade Balance

March 19 (Tuesday)

05:00 NZD Westpac Consumer Confidence Index

07:00 AUD Kent RBA Assistant Governor Speech

09:30 AUD HPIRBA Board Meeting Minutes

18:30 GBP Employment Change and Unemployment Rate and Average Earnings

19:00 EUR Euro Area ZEW Economic Sentiment Index

March 20 (Wednesday)

Withdrawal Bill Voting Deadline

06:45 NZD Current Account

08:50 JPY BoJ Monetary Policy Meeting Minutes

09:00 AUD Block RBA Assistant Governor Speech

18:30 GBPCPI (Consumer Price Index)

23:30 USD Crude Oil Inventories

March 21 (Thursday)

EU Summit (Leaders’ Meeting)

03:00 USDFOMC Rate Decision and Statement

03:30 USDPowell FOMC Press Conference

06:45 NZDQuarterly GDP

09:30 AUDEmployment Change and Unemployment Rate

17:30 CHFSwiss Policy Rate Announcement

18:00 CHFSNB Press Conference

18:00 NOKNorwegian Policy Rate Announcement

18:00 EUR Euro Area Monthly Report

18:30 GBPRetail Sales

21:00 GBPPolicy Rate, QE Amount, and MPC Voting Distribution

21:30 USD Philadelphia Fed Manufacturing Index

March 22 (Friday)

EU Summit (Leaders’ Meeting)

08:30 JPY CPI

17:15 EUR France Manufacturing, Services, and Composite PMI

17:30 EUR Germany Manufacturing, Services, and Composite PMI

18:00 EUR Euro Area Manufacturing, Services, and Composite PMI

21:00 GBP BoE Quarterly Report

21:30 CADCPI (Consumer Price Index)

22:45 USD Manufacturing and Services PMI

23:00 USD Existing Home Sales

March 23 (Saturday)

02:00 USD Baker Hughes Rig Count

03:00 USD Monthly Budget Statement