Impeachment trial for FOMC, focusing on the direction of the US dollar! "Key points and event schedule for January 29"
Yesterday, reports indicated new infections in Germany, and in Japan there were infections without travel history.
The spread of infections does not seem to be converging, but in Western markets the stock prices have rebounded, perhaps due to the statement by Tedros Adhanom Ghebreyesus, Director-General of the World Health Organization, saying, “We support the Chinese government's measures to combat the infection. I am confident that China has the ability to manage and contain the novel coronavirus.”
I wonder if the risk-off mood has really retreated, but today there are other factors to watch that are at least as important.
◎ Today’s Focus
1) FOMC
Today is the FOMC policy rate decision, but the expectation is likely to be kept unchanged.
The main focus is on the statement and press conference, particularly what will be said about the economic outlook and hidden QE.
In particular, attention is on how long the hidden QE will continue and the amount involved.
In the past few days, stock prices have fallen due to the impact of the coronavirus and risk-off sentiment, but some believe that the prior stock price rise was driven by the liquidity from QE.
Some speculate that stock prices may face downward pressure when QE ends, so there is focus on whether the hidden QE will continue.
2) Impeachment Trial
Yesterday, Senate Majority Leader Mitch McConnell (Republican) stated, “The Republicans do not have enough votes to compel witnesses in the impeachment trial.”
These witnesses are thought to be former National Security Advisor John Bolton.
If Bolton is called as a witness in Trump’s impeachment trial, it could be a blow to President Trump.
Bolton, who served as an advisor to Trump and was in charge of military matters, was dismissed for differing views, and has since published a book. Therefore, it is plausible that unfavorable testimony could emerge against Trump.
He is unlikely to be removed in the impeachment trial, but unfavorable testimony could make the next presidential election more challenging.
Whether Bolton testifies as a witness could become a risk-off factor.
3) Australia CPI
Today’s CPI release is an economic indicator that will significantly influence monetary policy decisions.
Especially given concerns that the Chinese economy may slow due to the coronavirus, the Australian economy is in focus.
Australia is trying to reduce its reliance on China, but China’s influence remains substantial.
In this situation, if the Australian CPI comes in below expectations, expectations for rate cuts could rise again, leading to a fall in the Australian dollar.
The CPI release at 9:30 today is noteworthy.
◎ Today’s Event Schedule
Wednesday, January 29
08:50 JPY Bank of Japan Monetary Policy Meeting Minutes
09:30 AUDAustralian CPI (Consumer Price Index)
16:00 GBP UK House Price Index
16:00 EUR Germany GfK Consumer Confidence Index
Thursday, January 30
00:00 USD US Existing Home Sales
00:30 USD Crude Oil Inventories
04:00 USDFOMC Policy Rate and Statement Release
04:30 USDPowell Press Conference
06:45 NZD NZ Trade Balance
