Will the risk-off prompted by the coronavirus continue? "Key points on January 22 and the event schedule"

Since yesterday, reports have been coming out that the Davos summit between President Trump and the EU is raising expectations for trade negotiations and a major agreement.

What drew even more attention, however, was the coronavirus, which, due to the spread of infections, led to a risk-off mood and a global decline in stock prices.

It remains to be seen whether the coronavirus will continue to drive risk-off or retreat, bringing back attention to events like the Davos conference.

In terms of points of interest, the Bank of Japan’s monetary policy meeting was announced, but it has almost no impact on the market.

As expected, the policy remained unchanged, and at the time of the announcement and during the press conference, there was little impact on the currency market.

Today, Canada will announce its policy rate.

There is a expectation that it may move a little.

◎ Today’s Points of Focus

1) Canada Policy Rate Announcement

A hold is expected for this policy rate announcement.

The focus is on the statement and the press conference.

Investors will be watching how Canada views the impacts of oil price rises due to Middle East risk, and the replacement of NAFTA with USMCA on its economy, as well as how it views future policy.

2) Coronavirus

With the spread of coronavirus infections, the Shanghai Composite and Hang Seng indices declined, turning risk-off, and stock prices fell globally, with reports of infections in the United States and Washington accelerating risk-off.

China enters a major holiday period starting on the 24th for the Lunar New Year.

There are concerns that the coronavirus infections could surge with many Chinese travelers during the Spring Festival.

We are watching whether this concern will push risk-off further.

On the other hand, some say that the declines in the Shanghai Composite and Hang Seng indices before the Spring Festival may be profit-taking, not just a coronavirus-driven drop.

In Japan and U.S. equities, some say this is a correction of previous gains.

It is suggested that the coronavirus may have been used as a factor in the correction.

From here, if no further infections are observed, risk-off may retreat quickly.

Also, if it’s just a correction, the rise may resume soon.

When reports of infection spread come out, the key point will be whether risk-off progresses.

◎ Today’s Event Schedule

Wednesday, January 22

World Economic Forum Annual Meeting (Davos Conference) (through the 24th)

08:30　AUD　Westpac Consumer Confidence Index

16:40　GBPCarney, BOE Governor, Speech

22:30　CADCanada CPI (Consumer Price Index)

Thursday, January 23

00:00　USD　U.S. Existing Home Sales

00:00　CADCanada Policy Rate & Statement

01:15　CADBoC Governor Press Conference

08:50　JPY　Trade Balance

09:30　AUDAustralia Employment & Unemployment Rate