How will the risk of the novel coronavirus expand with the start of the Lunar New Year? "January 24 highlights and event schedule"
Yesterday's market is turning risk-off due to concerns about the spread of the novel coronavirus.
The USD/JPY fell briefly below 109.30 yen.
However, at the points where USD/JPY fell, there are reports of genuine demand from real buyers who had been slow to buy during the recent upmove in USD/JPY.
The euro also dropped significantly yesterday after the ECB Council meeting and press conference.
In particular, the euro/franc is at the focal “1.0700” line, with a struggle anticipated around that level.
There is attention on whether Switzerland can defend this level.
Today is a shortened trading day (fifty days) and the weekend, and China starts its Spring Festival.
I would like to manage risk carefully.
◎ Today’s Highlights
1) Risk-off
In China, where new coronavirus infections are being reported, the United States has raised its alert level for visiting China.
With movement of people restricted, there is speculation that the infection may affect oil prices, leading WTI crude to decline and related stocks to fall.
However, the World Health Organization has deemed the “emergency” premature, and the NY market’s later session has seen stock prices rebound.
Whether this recovery continues into the Tokyo and European markets, and whether it will ease the risk-off mood, is in focus.
In Wuhan, where the infection is centered, traffic restrictions are being imposed to contain it, but China will enter the Spring Festival and there will be a large human migration.
If infections are confirmed around the world over the weekend or early next week, a return to risk-off could occur.
Considering weekend risk, I plan to properly adjust positions.
2) Key Voices
Today is the final day of the Davos Forum.
Many speakers are scheduled, including ECB President Lagarde, BOJ Governor Kuroda, and U.S. Treasury Secretary Mnuchin, so attention is warranted.
3) Important Indicators
Yesterday, after Lagarde’s dovish press conference, the euro fell.
Whether the euro will recover or fall further will hinge on PMI releases from European countries.
PMIs in the UK are also awaited next week ahead of monetary policy decisions.
Improved employment data recently has kept rate-cut probabilities around 50%, making the outlook somewhat uncertain.
Today’s releases will determine how the probability of a rate cut moves.
Moreover, as the probability of a rate cut moves, the pound is expected to move significantly as well.
The Canadian dollar has weakened after the recent dovish policy rate decision.
Investors will be watching whether Canada’s retail sales can help the loonie recover or whether declines accelerate.
With crude oil prices falling, weaker-than-expected results could accelerate declines.
◎ Today’s Economic Calendar
January 24 (Friday)
World Economic Forum Annual Meeting (Davos Forum) (through the 24th)
08:30 JPY National CPI (Consumer Price Index)
08:50 JPY Bank of Japan Monetary Policy Meeting Minutes (Dec 19)
17:15 EUR France Manufacturing/Services/Composite PMI
17:30 EUR Germany Manufacturing/Services/Composite PMI
17:30 EUR Bank of France Governor de Guindos speech
18:00 EUR Italy Manufacturing/Services/Composite PMI
18:00 EUR Eurozone Manufacturing/Services/Composite PMI
18:00 EUR IFO Economic Confidence Index
18:30 GBP UK Manufacturing/Services/Composite PMI18:30 GBP Haske/BoE external member speech (Davos)
18:30 EUR Bank of France Governor de Guindos, Netherlands Central Bank Governor Knot speech (Davos)
19:30 EUR Lagarde ECB President speech (Davos)
19:30 USD Mnuchin U.S. Treasury Secretary speech (Davos)
19:30 JPY Kuroda BoJ Governor speech (Davos)
22:30 CAD Canadian retail sales
23:45 USD U.S. Manufacturing/Services/Composite PMI
January 25 (Saturday)
03:00 USD Baker Hughes rig count
