COVID-19 (New Coronavirus) + Numerous Economic Indicators Attracting Attention This Week! "Focus Points and Event Schedule for the Week of February 17"
Last week, euro selling accelerated, with political instability in Germany being a major factor.
Also, most of the big news relates to COVID-19 (novel coronavirus).
Although the market has already priced in some of this, further increases in infections could trigger another risk-off move.
Risk-averse money from China, Japan, Oceania, and other regions is flowing into the dollar, pushing the dollar higher.
With the dollar rising to key levels, there is close attention on whether the United States will issue statements to curb the dollar’s strength.
This week, COVID-19 (novel coronavirus) is again likely to attract attention.
◎ This Week’s Focus
1) COVID-19 (novel coronavirus)
China’s Economy
There is criticism that infection spread occurred due to information control in China.
The Communist Party fears heightened criticism most, so it is likely to use various measures to quell public anger.
They will likely support stock prices and implement economic and infection-control measures.
However, if this cannot restrain the spread, China’s economy could take a big hit and affect economies around the world.
Attention is on whether China’s economy will cool further or not.
Japan’s Economy
In Japan, not only the cruise ships but infections are spreading domestically.
Particularly notable are the fate of cruise ship passengers, domestic tertiary infections, and the number of severe cases and deaths.
How passengers from the cruise ship will be accommodated, and which countries will bring them by charter aircraft, are points of focus.
There are now tertiary infections where domestic cases have no travel history (primary infections) and no known contact with travelers (secondary infections), and the source of infection is unclear.
If tertiary infections begin to spread, it will become difficult to stop the spread, potentially leading to rapid infection growth like in China.
Additionally, last week there were fatalities from pneumonia in the country.
Even if infection onset can be treated appropriately, a perception of increased severity or deaths could spread anxiety and panic.
Because of the above, if infections (tertiary infections) or severe cases/deaths rise, travel from overseas would decrease, inbound tourism would drop sharply, making imports of parts and materials harder and causing significant economic losses due to production stoppages.
We will focus on the three points above this week.
Additionally, attention is on whether the Olympics will be held, whether the planned participating countries will participate, and whether tourists will come.
There is a view that these numbers may drop, and there are reports that foreign investors are withdrawing from Japanese stocks.
If the Olympics become seriously doubtful, outbound withdrawals from the Japanese market could accelerate, so this is worth watching.
Europe’s Economy
When China’s economy cools, Chinese incomes decline and Chinese consumption decreases.
If consumption from China falls, Europe (especially Germany) suffers because a large portion of its demand comes from China, so Europe’s economy would slow.
With political instability, economic downturn would accelerate euro selling.
This deserves close attention.
2) Economic Indicators and Key Officials’ Remarks
This week features a large number of economic indicators.
FOMC, ECB, and RBA Minutes
Attention is on each central bank’s policy rate decisions, future policy plans, economic outlooks, and key policy considerations.
UK and Canada CPI (Consumer Price Index)
CPI is a policy-shaping indicator, so it could move significantly.
In particular, CPI in the UK where rate cuts are anticipated, and Canada where the CPI result could trigger policy shifts despite a neutral stance, deserve special attention.
UK and Australian Employment
Employment is a policy-influencing indicator like CPI, so it should be watched closely.
Australia’s recent meeting suggested focus on the unemployment rate, so this is especially important.
In the UK, concerns about rising prices make the relationship between earnings and prices a point of focus.
European PMI
Manufacturing, services, and composite PMIs for France, Germany, and the euro area will be released over the weekend.
PMIs for manufacturing, services, and composite are flash readings, so deviations from forecasts are likely, and the euro could move significantly.
Worth watching.
Officials’ Remarks
Early in the week, the Eurozone/EU finance ministers meeting is held, and the weekend features the G20 finance ministers and central bank chiefs meeting, gathering many officials.
There are many other officials’ remarks scheduled.
With many officials whose remarks could influence policy decisions, this is highly notable.
3) Turkey Policy Rate Announcement
The Turkish central bank is expected to continue cutting rates under pressure from President Erdogan, and the lira has been sold.
This week’s policy rate release is also forecast with mixed expectations.
We will monitor what the expectations for a cut are just before the decision, whether the outcome will truly meet expectations, and whether the lira can hold its levels around key thresholds.
◎ This Week’s Event Schedule
Mon, February 17
U.S. and Canada markets closed
Eurozone Finance Ministers Meeting
08:50 JPY GDP
23:00 EUR Lane ECB Executive Board member speech
Tue, February 18
EU Finance Ministers Meeting
09:30 AUD2/ RBA Minutes
17:30 SEK Sweden Unemployment Rate
18:30 GBPUK Employment, Unemployment, and Average Earnings
19:00 EUR Germany and Eurozone ZEW Sentiment Index
Wed, February 19
08:50 JPY Japan Trade Balance
17:30 SEK Sweden CPI
18:00 EUR Euro Area Current Account
18:30 GBPUK CPI (Consumer Price Index)
20:00 TRYTurkey Policy Rate Announcement
22:10 USD Dallas Fed President Barkin speech (2021 voting rights)
22:30 USDMester, Cleveland Fed President speech (2020 and 2022 voting rights)
22:30 USD Building Permits
22:30 CADCanada CPI (Consumer Price Index)
Thu, February 20
01:45 USDKashkari, Minneapolis Fed President speech (2020 voting rights)
03:30 USDKaplan, Dallas Fed President speech(2020 voting rights)
04:00 USDFOMC Minutes (January 29)
06:30 USD Barkin, Richmond Fed President speech (2021 voting rights)
09:30 AUDAustralian Employment Change and Unemployment Rate
16:00 EUR Germany GfK Consumer Confidence
16:45 EUR France HICP (CPI)
18:30 GBPUK Retail Sales
19:30 EUR Deginto ECB Vice President
21:30 EURECB Governing Council Minutes (Jan 23)
22:30 USD Philadelphia Fed Manufacturing Index
22:30 CAD Canada New Home Prices
Fri, February 21
Iranian Parliament Elections
01:30 USD Crude Oil Inventories
07:00 AUD Australian Services and Manufacturing PMIs
17:15 EUR France Manufacturing, Services, and Composite PMIs (flash)
17:30 EURGermany Manufacturing, Services, and Composite PMIs (flash)
18:00 EUREuro Area Manufacturing, Services, and Composite PMIs (flash)
18:30 GBPUK Manufacturing, Services, and Composite PMIs (flash)
19:00 EUR Italy HICP (CPI)
19:00 EUR Euro Area HICP (CPI)
22:30 CAD Canada Retail Sales
22:35 USD Caplan, Dallas Fed President speech23:45 USD U.S. Manufacturing, Services, and Composite PMIs
Sat, February 22
G20 Finance Ministers and Central Bank Governors Meeting
Democratic Party Caucus (Nevada)
00:00 USD Existing Home Sales
00:15 USDBrainard Fed Governor speech
02:00 EURLane, ECB Executive Board member speech
03:00 USD Baker Hughes Rig Count
03:30 GBPTenreiro external BOE board member
03:30 USDLael Brainard, Fed Vice Chair speech
03:30 USDMester, Cleveland Fed President speech (2020 and 2022 voting rights)
Sun, February 23
Hamburg City State Assembly Election (Germany)
