Brexit, BOE policy rate, FOMC announcements, and important events to watch! "Key points and event schedule for the week of January 27"
This week the United Kingdom will leave the EU.
Last week, the Brexit bill was approved by the UK Parliament, and subsequently received the consent of Queen Elizabeth II.
It looks like the exit will take place on the deadline of January 31.
Meanwhile, in China the novel coronavirus has led to confirmed cases in various countries, causing stock prices to fall and creating a risk-off environment.
This week there are important monetary policy announcements and key indicators, so I think currencies that move well and establish a direction will emerge.
◎ This Week’s Focal Points
1) Super Thursday
This week the Bank of England is scheduled to announce its policy rate on “Super Thursday.”
“Super Thursday” refers to a day when, in addition to the policy rate and a statement, the quarterly Inflation Report is released (outlook for the economy and inflation, among other things), making policy changes more likely and drawing heightened attention.
This time, expectations for a rate cut versus a hold are balanced.
In such cases, markets tend to move whether the rate is cut or held, so attention is high.
The four points to watch this time are:
・Whether it will be a rate cut or a hold
・Voting distribution among MPC members
・Content of the Inflation Report
・Probability and outlook for future rate cuts
Also, the UK’s exit deadline falls on the 31st, the day after Super Thursday, and since Boris Johnson’s Brexit plan has obtained approval from Parliament and Queen Elizabeth II, the UK is expected to exit on the 31st and move into the transition period to exit the EU from February 1.
With the exit occurring the day after the BOE policy announcement, I am also watching to see how this might influence policy decisions.
2) FOMC
The FOMC is scheduled for this week, but no policy changes are expected; a hold is anticipated.
What will attract attention is not the policy itself but the outlook for the economy as shown in the statement and press conference.
There is also interest in whether the so-called hidden QE will continue for how long, and commentary on this topic is also watched.
3) Risk Off
From last week, the novel coronavirus has drawn rising attention, spreading worldwide and prompting risk-off behavior.
In Wuhan, the outbreak origin, traffic is blocked to contain the virus, and cases are confirmed around the world.
Over the weekend, China entered the Spring Festival, during which many Chinese travel abroad.
If infections increase globally as a result, risk-off may intensify, drawing attention.
I expect the market mood to change with the expansion or contraction of infections, so I will monitor global infection reports closely.
4) Key Indicators
In addition to policy announcements, important data include Australia CPI, US GDP, and Canada GDP.
Additionally, euro area HICP preliminary figures for various countries are scheduled.
Recently, European PMIs and HICP tend to move markets more.
In particular, the releases this time are preliminary, and preliminary figures often diverge from expectations, so they are likely to cause notable movement.
We should pay close attention to these indicators as they are released.
I think so.
◎ This Week’s Economic Event Schedule
Monday, January 27
16:00 EUR Germany GfK Consumer Confidence
18:00 EUR Germany Ifo Business Climate
Tuesday, January 28
00:00 USD New Home Sales
09:30 AUD NAB Business Confidence
17:30 SEK Sweden Retail Sales
22:30 USD US Durable Goods Orders
Wednesday, January 29
00:00 USD Consumer Confidence
08:50 JPY BoJ Monetary Policy Meeting Minutes
09:30 AUD Australia CPI16:00 GBP UK House Price Index
Thursday, January 30
00:00 USD Existing Home Sales
00:30 USD Crude Oil Inventories
04:00 USD FOMC Interest Rate Decision and Statement
04:30 USD Powell Press Conference
06:45 NZD New Zealand Trade Balance
16:00 JPY Amamiya remarks at BoJ
17:55 EUR Germany Unemployment Rate
21:00 GBP Bank of England Monetary Policy Summary and Inflation Report; MPC votes
21:30 GBP Carney Press Conference
22:00 EUR Germany HICP
22:30 USD US GDP
Friday, January 31
Brexit Deadline Day
03:00 EUR Weidmann, President of the German Bundesbank, speaks
10:00 CNY China Manufacturing PMI
15:30 EUR France GDP
16:45 EUR France HICP
17:00 EUR Spain HICP and GDP
19:00 EUR Eurozone HICP and GDP
22:30 USD US PCE Deflator
22:30 CAD Canada GDP
Saturday, February 1
Brexit Transition Period Begins
00:00 USD University of Michigan Consumer Confidence
03:00 USD Baker Hughes Rig Count
