/translate: Will the RBA cut rates? What about the general policy address? “February 4: Points of focus and event schedule”
Yesterday seemed likely to be a historic market day, but there was no major turmoil, and it passed with only the expected decline in the Shanghai Composite Index.
China responded with measures such as trading restrictions and a capital supply of about 18 trillion yen; in Western markets, stocks remained firm, and the US dollar rose on the back of strong results in the US ISM Manufacturing PMI, among other factors.
However, the spread of the novel coronavirus is still ongoing.
The pound has fallen sharply due to concerns about a possible no-deal Brexit with the EU.
◎ Today’s Focus Points
1) RBA Board of Directors
The Reserve Bank of Australia (central bank) policy rate decision scheduled for today is drawing attention as it will be announced by the RBA board.
Due to uncertainties such as China’s economy and the impact of the novel coronavirus, expectations for a rate cut have emerged.
However, recent Australian economic indicators show improvement, and based on the data, holding rates steady is considered highly likely.
Looking at most forecasts, the majority expect a hold by an 8 to 2 ratio.
In the case of a hold, attention will be on the accompanying statement and tomorrow’s remarks by Governor Lowe, focusing on the impact of the coronavirus and the possibility of further rate cuts, as well as overall economic outlook.
Additionally, Governor Lowe is scheduled to testify before Parliament in a semiannual appearance on the 7th this week.
Watch the Australian dollar’s movements closely.
2) The State of the Union Address
Today, President Trump’s State of the Union Address is scheduled.
In the State of the Union, the president outlines the country’s current状況, political challenges, achievements, and policy directions.
President Trump is expected to emphasize the results of the US-China agreement and the USMCA (new NAFTA), and present the year’s policy directions; negative content is not expected.
Of particular interest is this year’s policy direction ahead of the presidential election and what policies will be pursued, drawing attention.
3) The Novel Coronavirus
Yesterday, the Chinese market reopened after the Spring Festival, but measures such as capital supply and limits on futures trading helped avoid a large-scale upheaval.
Even though a large upheaval was avoided, the Shanghai Composite Index slipped by about 8%
Nevertheless, stock prices in Western markets remained firm, and there has been buying back of the yen and the Swiss franc.
Whether this move is a pullback or a risk-off retreat remains to be seen, making today a day to gauge that.
Therefore, I want to keep an eye on how stocks in Tokyo, China, and the US/Europe move, what happens to commodity prices such as gold and crude oil, and whether the number of coronavirus infections and deaths will expand.
4) The Pound
Yesterday, the pound fell sharply on Prime Minister Boris Johnson’s remarks, signaling a hard stance toward the EU and setting a target to complete negotiations by the end of the year, which increased the likelihood of a no-deal Brexit and caused the pound to drop significantly.
Negotiations between the UK and the EU officially begin in March, but currently both sides are engaged in psychological warfare and horse-trading to gain an advantage for March talks.
This exchange is likely to cause the pound to move up and down.
Today, I will also watch for what headlines and statements emerge.
◎ Today’s Events Schedule
Tuesday, February 4
Trump’s State of the Union Address
12:30 AUDRBA Policy Rate and Statement Release
18:30 GBPUK Construction PMI
19:00 EUR Italy HICP (Consumer Price Index)
Wednesday, February 5
00:30 MXN Mexico Manufacturing PMI
06:45 NZD Employment Change and Unemployment Rate
