Pay attention to the ECB Governing Council! "Key Points on January 23 and the Event Schedule"

Due to improvements in the UK employment statistics released recently and yesterday’s UK manufacturing trend survey, the probability of a rate cut, which was around 70%, has fallen to around 50%.

As a result, the pound has been bought back and is rising.

Also, when European markets opened, the franc was sold off sharply, leading to franc weakness.

There are rumors that SNB (Swiss National Bank) is conducting franc-selling interventions.

Canada’s policy rate was held as expected, but since the statement that had been anticipated to be neutral-to-hawkish turned doveish, the Canadian dollar has been sold and the CAD is weakening.

Risk-off due to the coronavirus and risks from the Davos Meeting continue to be present.

◎ Today's Points of Focus

1) ECB Governing Council

The ECB Governing Council is scheduled for today, with focus on policy rates, the statement, and the press conference.

There is no expected change to policy rates or QE policy, but attention is on any changes to the outlook for the economy.

In particular, how the EU — which has been targeted with tariffs replacing China recently — views the future of its economy, how it views the UK’s exit from the EU and transition period at the end of this month, and the impact of the resignation of the left-wing Five Star Movement party leader in Italy on political stability — I would like to focus on these aspects.

2) Oceania Indicators

Australia’s employment statistics will be released.

With US-China relations stabilizing, Australia’s economy is thought to have hit a trough.

Whether there is real improvement will be closely watched in the employment data.

Also, NZ quarterly CPI will be released tomorrow early morning.

CPI is an important factor for central banks’ policy decisions, and since it is released only quarterly, its impact on the market is large.

Because the release time is after the NY close, sharp moves can occur, so be careful.

3) Risk-Off

Risk-off concerns persist due to the novel coronavirus.

Attention is focused on whether this situation will continue or ease.

Additionally, President Trump’s impeachment trial has begun.

Italy’s government is also showing signs of instability.

Middle East risks remain uncertain.

China’s stance on Hong Kong and Taiwan also requires caution.

Given the remaining risk factors, caution is warranted.

◎ Today’s Event Schedule

January 23 (Thursday)

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

08:50　JPY　Trade Balance

09:30　AUDAustralia Employment and Unemployment Rate

17:30　SEK　Sweden Unemployment Rate

18:00　NOKNorway Policy Rate Announcement

21:45　EURECB Governing Council, Policy Rate and Statement

22:30　EURLagarde ECB President Press Conference

January 24 (Friday)

00:00　EUR　Euro area Consumer Confidence Index

01:00　USD　Crude Oil Inventories

06:45　NZDNZ Quarterly CPI (Consumer Price Index)

07:00　AUD　Australia Services and Manufacturing PMI

08:30　JPY　National CPI (Consumer Price Index)

08:50　JPY　BOJ Monetary Policy Meeting Minutes (Dec 19)