With the impact of the novel coronavirus remaining, will risk-off retreat!? “February 5 Highlights and Event Schedule”
The Shanghai Composite Index fell the day before yesterday, but the decline was limited as China took measures.
Yesterday, the Shanghai Composite Index rebounded and closed in positive territory; the Hong Kong Hang Seng Index also rose, and global stock prices ended higher.
It seems that the market is turning risk-on as the Chinese market stabilizes, with gold prices falling and cross-yen and cross-franc selling occurring.
With the impact of the novel coronavirus still present, we are watching to see whether the risk-on phase will emerge.
◎ Highlights for Today
1) The General State of the Union Address
In President Trump's State of the Union Address, I expect content that boasts about the stock gains and solid economic data so far.
Regarding this year's policy, tax cuts are anticipated, and I am watching how large the measures will be and what policies will be proposed ahead of the presidential election.
Be careful not to say things that could be perceived as aggressive toward China, Europe, or other countries (which could trigger risk-off behavior).
Given the content of the State of the Union Address at 11:00, U.S. interest rates and stock prices are likely to move, which could affect the exchange rate, so I will be cautious.
2) Economic Indicators
Today, many important indicators are scheduled.
Among them, the ADP Employment Report and the ISM Non-Manufacturing PMI are in focus.
In particular, the ISM Non-Manufacturing PMI has drawn more attention since the ISM Manufacturing Index released recently beat expectations by a wide margin.
Additionally, revisions of Composite and Service PMI for various European countries will be announced.
These revision values are less likely to deviate from expectations, but if results diverge, there could be movement, so I will be careful.
Oil prices have fallen due to the impact of the novel coronavirus.
They have broken below the range and entered the 49-dollar area.
Today’s oil inventory releases will be watched to see whether they cause further declines or act as a rebound catalyst.
3) Comments from Lowe
The Reserve Bank of Australia (RBA) board left rates unchanged yesterday, but the statement remained almost unchanged from the previous one, with no mention of COVID-19 or Middle East risks.
A dovish tone was expected, but it appears to have remained neutral.
As a result, the Australian dollar was bought yesterday, recovering from previous selling.
If today’s remarks from Governor Lowe are about the same as the statement yesterday, the Aussie may rebound a bit further.
Conversely, if he touches on risks not mentioned in the statement and hints at a rate cut or takes a dovish stance, the Australian dollar’s gains could reverse.
Governor Lowe is also scheduled for semi-annual parliamentary testimony on the 7th.
All eyes on Lowe’s remarks today and on the 7th.
◎ Today's Event Schedule
Wednesday, February 5
10:30 AUD Governor Lowe, RBA, Remarks
10:30 JPY
10:45 CNY
11:00 USD President Trump, State of the Union Address
16:30 SEK
17:10 EUR De Guindos, ECB Vice-President, Remarks
17:45 EUR
17:50 EUR
17:55 EUR Germany Composite & Services PMI (revised)
18:00 EUR Euro Area Composite & Services PMI (revised)
18:30 GBP UK Composite & Services PMI
19:00 EUR
20:30 EUR
21:15 EUR Lagarde, ECB President, Remarks
22:15 USD ADP Employment Report
22:30 USD US Trade Balance
22:30 CAD Canada Trade Balance
23:45 USD US Composite & Services PMI (revised)
Thursday, February 6
00:00 USD ISM Non-Manufacturing PMI
00:30 USD Crude Oil Inventories
02:30 CAD Wilkins, Bank of Canada Deputy Governor, Remarks
06:10 USD Brainard, Federal Reserve Governor, Remarks
