EU Summit Day 2! What is Britain's fate? A short-term extension of the withdrawal deadline!? ~ Highlights and schedule for March 22 ~

Yesterday, following the FOMC, the dollar weakened and the yen strengthened. However, in the latter part, risk-off buying pushed the dollar up. The EU Summit is underway, and with Brexit uncertainty increasing, it seems that the pound and the euro are being sold. Additionally, risk-off sentiment is selling commodity currencies. As a result, the currencies that can be bought are the yen, the Swiss franc, and the US dollar. Regarding the yen and the franc, due to negative interest rates, there is movement toward buying the US dollar.

◎Points of Today

1) EU Summit

The EU Summit, which began yesterday, is on its second day today, and all eyes are on what will happen with the Brexit plan. Currently, the strong line is “re-vote on the Brexit plan by the UK Parliament next week; an EU extraordinary summit.” Depending on next week’s vote, a no-deal Brexit could occur.

Also, regarding further postponement of the Brexit deadline. The UK has applied for a delay until June 30, but other European countries seem to be applying ahead of national elections. It will be important to see what scale of extension emerges.

2) UK Parliament

Prime Minister May is at the EU Summit, but she is watching the UK as well. In particular, attention is on the legal opinion from Attorney General Cox. It was expected to be released earlier this week on the 18th–19th, but it has not yet been published. At the Summit, a revised vote outcome could lead to an extraordinary EU Summit next week. The legal opinion from Attorney General Cox is likely to heavily influence the result of this re-vote, so all eyes are on the legal opinion.

3) Canada CPI

Today, Canada will release the CPI (Consumer Price Index). Recently, the Canadian dollar has shown higher volatility. Also, given its relatively high interest rates, it is a currency growing in popularity for carry trades.

Since the start of this week, the Canadian dollar has been on a decline. Will the CPI release change the trend? We are watching closely.

◎Today's Economic Event Schedule

Friday, March 22

EU Summit (Summit of Leaders)

08:30 JPY CPI (Consumer Price Index)

17:15 EUR Draghi Deputy President or Lagarde (Note: original says Degintos ECB Vice President; likely refers to ECB official)

17:15 EUR France Manufacturing & Services PMI; Composite PMI

17:30 EUR Germany Manufacturing & Services PMI; Composite PMI

18:00 EUR Eurozone Manufacturing & Services PMI; Composite PMI

21:00 GBP Bank of England Quarterly Report

21:30 CAD CPI (Consumer Price Index)CPI (Consumer Price Index)

22:45 USD Manufacturing & Services PMI

23:00 USD New Home Sales

Saturday, March 23

02:00 USD Baker Hughes Rig Count

03:00 USD Monthly Budget Statement