Will the ECB also cut rates following the RBA, FRB, and BOC!? “Key points and event schedule for the week of March 9”
Last week, due to the global concerns of a recession sparked by the COVID-19 (novel coronavirus) outbreak, the RBA, FRB, and BOC announced consecutive rate cuts.
The Bank of Canada (BOC) slashed rates by a substantial 0.5%, and even though the FRB announced a 0.5% rate cut at an emergency meeting ahead of the March 19 FOMC, it did not provide support to the stock market.
With the FRB still lowering rates by 1.25%, expectations for further cuts remained at the March 19 FOMC, and U.S. interest rates fell, with the 10-year yield hitting an all-time low of 0.67%.
Dollar/yen briefly fell below 105 amid narrowing U.S.–Japan rate differentials.
It remains to be seen whether risk-off will continue this week.
◎ This Week’s Highlights
1) ECB Governing Council
As the U.S., Canada, and Australia move to cut rates one after another, the ECB’s rate cut is also in focus.
The ECB has already adopted negative rates and, in September last year, deepened the negative rate to -0.5%.
Also, in September last year, along with the rate cut, the central bank restarted QE at 20 billion euros per month, and relaxed the conditions for TLTRO.
Unlike the U.S., Canada, and Australia, the ECB has already implemented substantial monetary easing, so there is a view that room for further easing is limited.
At this council meeting, a rate cut of 0.1% or 0.2% is anticipated.
TLTRO is also expected to be discussed.
Attention is on whether QE will continue as is or be expanded, and whether any remaining government securities purchases can be made within EU rules, as well as how the reverse rate (the turning point where monetary easing effects and side effects switch) will be handled; keep an eye on the statement and press conference.
2) Risk-off
Last week, the world continued to lean toward risk-off due to COVID-19 (novel coronavirus).
In California, a state of emergency was declared; in Italy, as in Japan, schools were closed; many countries implemented travel bans and entry restrictions, reducing the movement of people and goods and dampening economic activity.
In such circumstances, uncertainty about the future increased fears, stock prices fell, and safe-haven assets attracted funds.
Governments announced relief measures and budgets, and many central banks, including the U.S., Canada, and Australia, implemented monetary easing such as rate cuts.
However, the effects have been limited and have not provided sufficient support for stock prices, which continued to fall.
Many measures are expected this week as well, and all eyes will be on whether they can stabilize stock prices or whether risk-off pressures will continue to push prices down.
Additionally, attention is on whether the end of COVID-19 (novel coronavirus) is in sight, whether the worst-case scenario will become clearer, and whether there is a clearer prognosis.
3) U.S. Presidential Election — Democratic Primary
Last week saw a crucial Super Tuesday in the United States, narrowing the Democratic field to Sanders and Biden.
Left-leaning Sanders started strong but was overtaken by the previously lagging Biden.
Wall Street expressed concerns about Sanders’ policies, and with Biden in the lead after Super Tuesday, stock prices rose on that sentiment.
Even so, the gap between the two remains a close race.
The next primaries on March 10 will be held in Michigan, Washington, Idaho, Mississippi, Missouri, and North Dakota, deciding the allocation of 352 delegates.
There remains a possibility of another reversal based on the March 10 results.
Pay attention to the results of the primaries and stock prices.
◎ This Week’s Economic Event Schedule
March 8 (Sunday)
U.S. Daylight Saving Time begins
March 9 (Monday)
08:50 JPY GDP (Q4, revised)
15:45 CHF Swiss unemployment rate
21:00 MXN Mexico CPI
21:15 CAD Canada housing starts
21:30 CAD Canada building permits
March 10 (Tuesday)
09:30 AUD NAB business confidence
10:00 NZDOkachan Man RBA Governor’s remarks
10:30 CNY China CPI
15:00 NOK Norway CPI
19:00 EUR Eurozone GDP (Q4, final) and employment statistics
March 11 (Wednesday)
02:00 USD U.S. 3-year note auction
07:00 AUDDebelle RBA Deputy Governor remarks
08:30 AUD Westpac consumer confidence index
18:30 GBPUK GDP
21:30 USDU.S. CPI (consumer price index)
23:30 USD Crude oil inventories
March 12 (Thursday)
02:00 USD U.S. 10-year bond auction
03:00 USD Monthly budget statement
17:30 SEK Sweden CPI
21:45 EURECB Governing Council, policy rate, and statement
22:30 EURDraghi ECB President press conference
02:00 USD U.S. 30-year bond auction
06:00 NZD Westpac consumer confidence index
06:30 NZD NZ manufacturing PMI
16:00 EUR Germany HICP
16:45 EUR France HICP
17:00 EUR Spain HICP
23:00 USD University of Michigan consumer confidence
March 14 (Saturday)
02:00 USD Baker Hughes Rig Count
Okachan Man’s Recommended Analysis Tool
TradingView
It is a platform that handles numerous currency pairs, commodities, bonds, and stock indices, allowing a variety of analyses.
Markets such as forex, equities, bonds, and commodities are interrelated, and comparing them across markets is advantageous for trading.
Displaying forex and stock indices, or forex and commodities, on a single chart for overlaying is very convenient when making comparisons.
Many features can be used for free, so why not give it a try!
It also includes social features, so I’d love for you to follow it ↓↓↓
https://jp.tradingview.com/u/okachanman/
