New fiscal year starts! Will the UK finally exit without a deal!? ~Highlights and event schedule for the week of April 1~
Last week, around the Brexit deadline in the UK, Parliament-led votes on Brexit alternatives and Prime Minister May's Withdrawal Agreement vote were held several times, but all were rejected and nothing was decided. Although the Brexit deadline has been extended to April 12 for now, the likelihood of a no-deal Brexit is rising and the pound has softened.
Additionally, liquidity of the Turkish lira has plummeted, and under pressure from President Erdogan, swap rates have surged.
◎ This Week's Spotlight Video
◎ This Week's Points of Focus
1) UK Parliament
With the third rejection of Prime Minister May's Brexit deal last week, nothing has been decided and the Brexit deadline passed. Parliament-led eight Brexit alternatives were voted on, but all were rejected as well.
On April 1, among the eight Brexit alternatives, those with the smallest margin will be brought to a revote. It is possible that one of these alternatives may be approved, but since the vote has no legal binding effect, it is unclear what happens after approval.
Also, an extraordinary EU summit is scheduled for April 10. If, by then, neither a Brexit deal nor an extension of the long-term deadline is requested, there will be a no-deal Brexit on April 12.
Therefore, this week is shaping up to be the major turning point (I feel I say this every week...).
2) European Economic Indicators
Germany's manufacturing PMI fell sharply last month, causing the euro to drop significantly. This week, manufacturing, services, and composite PMIs for major European economies such as Germany, Italy, and France will be released. The Harmonized Index of Consumer Prices (HICP) will also be published. Given last month’s developments, caution is warranted, especially as there is a concentration of releases on April 1 and 3.
With concerns about a recession, the ECB's March meeting revealed the introduction of the easing measure known as TLTRO. The minutes of that ECB meeting will be released on the 4th. We will watch for what was discussed regarding the easing path and recession concerns, including any oppositions.
3) Turkish Lira
President Erdogan is pressuring banks to prevent selling the Turkish lira. Liquidity has collapsed and swap rates have surged. Saxo Bank’s Turkish lira selling swap temporarily exceeded -2,900 yen. Such conditions are unlikely to last long, and hedge funds are reportedly aiming to short the lira when liquidity returns or swap rates ease is expected.
On Sunday, March 31, Turkey will hold local elections. Erdogan's pressure is thought by some to be election-related. Therefore, there is a possibility that the lira could be targeted after the elections, so caution is advised.
4) New Fiscal Year Starts
With April arriving, the new fiscal year begins. In Japan, new-year investments in insurance and pensions start. The extent of foreign debt and other investments will influence whether dollar buying proceeds. I will be watching for real-money market participants’ moves.
◎ This Week's Economic Event Schedule
March 31 (Sunday)
Turkey Local Elections
UK and Europe Summer Time starts
April 1 (Monday)
Parliament-led Brexit alternatives vote
07:30 AUD Manufacturing PMI
08:50 JPY Bank of Japan quarter reading
09:30 AUD NAB business confidence index
10:45 CNYCaixin Manufacturing PMI
15:30 SEK Sweden Manufacturing PMI
16:00 NOK Norway Manufacturing PMI
16:45 EURItaly Manufacturing PMI
16:50 EURFrance Manufacturing PMI
16:55 EURGermany Manufacturing PMI
17:00 EUR Eurozone Manufacturing PMI
17:30 GBPManufacturing PMI
18:00 EUR Euro Area HICP (CPI)
21:30 USDRetail Sales
22:45 USD Manufacturing PMI
23:00 USDISM Manufacturing PMI
April 2 (Tuesday)
04:10 CADPowell’s Remarks at BOC
09:30 AUD Building Permits
12:30 AUDPolicy Rate and Statement Release
15:30 CHF Switzerland CPI
17:30 GBPConstruction PMI
18:00 EUR Euro Area Unemployment Rate
21:30 USD Durable Goods Orders
U.S.-China Senior Officials Trade Talks(Washington)
09:30 AUD Trade Balance & Retail Sales
10:45 CNY Caixin Services PMI
15:30 SEK Sweden Services PMI
16:00 TRYTurkey CPI
16:45 EUR Italy Services PMI
16:50 EUR France Composite & Services PMI
16:55 EURGermany Composite & Services PMI
17:00 EUR Euro Area Composite & Services PMI
17:30 GBPServices PMI
18:00 EUR Retail Sales
21:15 USDADP Employment Report
21:30 USD Powell's/Holiday speech
22:45 USD Composite & Services PMI
23:00 USDISM Non-Manufacturing PMI
23:30 USD Crude Oil Inventories
April 4 (Thursday)
06:00 USD Kashkari Minneapolis Fed President Speech
20:30 EURECB Meeting Minutes (March 7)
23:00 CAD Ivey Purchase Manager Index
April 5 (Friday)
02:00 USD Mester Cleveland Fed President Speech
15:45 EUR France Trade Balance
16:30 GBP Halifax House Price Index
21:30 USDNFP Employment, Unemployment, Average Hourly Earnings
21:30 CADEmployment Change & Unemployment Rate
April 6 (Saturday)
04:00 USD Consumer Credit
04:30 USD Powell's Speech
April 7 (Sunday)
Japan Local Elections
