Recently hot PMIs in Europe, the UK, and the US announced! "February 21 Highlights and Event Schedule"
Continuing from the day before yesterday, the USD/JPY surged again yesterday.
From the end of the day before yesterday, the USD/JPY, which was in the high 109s, has risen to the 112 handle.
There is a lot of speculation about various factors such as GPIF selling yen by whales, keystone plays by U.S. funds, and the downturn of the Japanese economy due to COVID-19 (novel coronavirus), leading to withdrawals of overseas money from the Japanese market.
Today is the weekend; will it continue to rise, undergo a brief pullback, or stagnate with little movement? All eyes are on it.
What stands out is SNB (Swiss National Bank); it is about time they intervene with selling, but there is no movement yet.
There is anxiety about what would happen if expectations become too high and the ladder is pulled away, possibly triggering a Swiss shock again.
◎ Today's Points of Focus
1) Economic Indicators
Euro Area and UK PMIs
PMI, a highly watched sentiment indicator, will be released.
Manufacturing, services, and composite PMIs will be released simultaneously today for the markets of France, Germany, the euro area, and the UK.
Moreover, these are flash (initial) readings, so the results may diverge from expectations, which could strongly impact the FX market.
Be especially cautious with the euro and the pound.
Canada Retail Sales
With rising oil prices, the Canadian dollar is being bought; attention is on Canada’s retail sales figures.
Among the four major currencies, the US dollar is becoming a safe-choice buy; among the eight major currencies, the Canadian dollar is also one that tends to be bought alongside the USD.
If the data are good, it could provide tailwinds for CAD purchases, so it’s in focus.
U.S. PMIs
In the U.S., ISM tends to get more attention, but today’s PMIs are also important.
Last month and late last year, ISM and PMI showed the same sentiment but diverged in results.
ISM results were more pessimistic, but it is being watched that the pessimism may have been excessive.
We are watching how today's PMI turns out and how much difference there will be with the ISM release early next month.
2) Remarks by Key Figures
Today there are many speeches scheduled by FOMC members.
Yesterday, Vice Chair Lael Brainard reiterated that cuts this year are unlikely.
Today, speeches are planned from dove-leaning Fed Chair Jerome Powell? (Note: The text says "Fed's Brrr" actually; corrected: Fed voters include Fed governors including Brainard and two regional presidents with voting rights this year.)
We will pay attention to movements in U.S. interest rates and the content of these speeches.
Also note speeches by MPC members of the Bank of England expected to cut rates in March and external BOE director Tenreiro.
3) Weekend Factors
G20 Finance Ministers and Central Bank Governors Meeting
The G20 finance ministers and central bank governors meeting will be held this weekend.
Attention is on what kind of statements will be made regarding the impact of COVID-19 and recession concerns, how China’s slowdown will affect things, how Brexit will influence the UK, and what policies will be proposed regarding fiscal and monetary policy.
Dollar Strength Comments
The Dollar Index, one of the indicators of dollar strength, is approaching a key level.
It is reaching the highs last seen in the Trump rally after Trump’s victory in November 2016, and the highs seen in April 2017.
Also, the psychological threshold of 100 is close.
From President Trump onward, there is watchfulness that calls for or against dollar-strength comments, and whether any statements over the weekend could lead to an opening gap on Monday morning.
Hamburg Special City-State Parliament Election in Germany
On Sunday the 23rd, the state parliament election will be held in Hamburg, in northern Germany.
With the SPD’s support slipping, the Greens have been rising, and there is focus on whether the Greens might seize the number one spot from CDU/CSU in a grand coalition scenario.
With Merkel’s successor Kramp-Karrenbauer resigning abruptly, uncertainty is clouding German politics.
If the number one seat changes hands in this election as well, further turmoil could arise.
◎ Today's Event Schedule
Friday, February 21
Iran Parliament Elections
08:00 NZD RBNZ Governor Speech
08:30 JPY Japan CPI (Consumer Price Index)
17:15 EUR France Manufacturing, Services, and Composite PMI (flash)
17:30 EUR Germany Manufacturing, Services, and Composite PMI (flash)
18:00 EUR Euro Area Manufacturing, Services, and Composite PMI (flash)
18:30 GBP UK Manufacturing, Services, and Composite PMI (flash)
19:00 EUR Italy HICP (Consumer Price Index)
19:00 EUR Euro Area HICP (Consumer Price Index)
22:30 CAD Canada Retail Sales
22:35 USD Brainerd Fed Governor Speech (2020 voting rights)
23:45 USD US Manufacturing, Services, and Composite PMI
Saturday, February 22
G20 Finance Ministers and Central Bank Governors Meeting
Democratic Party Caucus (Nevada)
00:00 USD Existing Home Sales
00:15 USD Brainard Fed Governor Speech
02:00 EUR Lane ECB Executive Board Member Speech
03:00 USD Baker Hughes Rig Count
03:30 GBP Tenreiro external BOE Director Speech
03:30 USD Clarida Fed Vice Chair Speech
03:30 USD Mester Cleveland Fed President Speech (2020 and 2022 voting rights)
Sunday, February 23
Hamburg Special City-State Parliament Election in Germany
