Will risk-off retreat? "Key points and event schedule for April 7"

Yesterday, Prime Minister Abe announced that an emergency declaration would be issued on the 7th for seven prefectures.

In the United States, reports that the rate of increase in cases and deaths has slowed have led to a retreat from risk-off, and stock prices around the world have risen.

Reports that countries such as Denmark and Australia are considering easing movement restrictions related to COVID-19 measures may also be contributing to a retreat from risk-off.

If this trend spreads, I think we could see a further unwind of risk-off.

◎ Today’s Points of Focus

1) Retreat of Risk-Off

Yesterday, risk-off retreated and stock prices rose sharply, with the Dow average up by more than 1,600 dollars.

Today, we will be watching whether the retreat from risk-off continues, focusing on the following points.

・Will the VIX index fall (40 as a threshold)

・Will crude oil prices rise

・Will the U.S. 10-year yield rise

・Will stock prices rise

・Will cross-yen strengthen (excluding USD/JPY)

If risk-off retreats, these factors tend to move in tandem, so keep an eye on them.

2) Euro Area Finance Ministers’ Meeting

In the euro area, large-scale easing by the ECB has been implemented, but with already existing easing policies before the COVID-19 impact, questions about the limits of monetary policy have arisen.

Therefore, fiscal stimulus by each country and corona bonds are being anticipated.

Regarding corona bonds, Germany and the Netherlands oppose them, so attention is on what measures will be proposed for countries where infections are spreading and cities are being locked down, such as Italy and Spain.

3) RBA Board Meeting

The RBA board meeting held today is expected to keep rates unchanged.

Last month, in response to the coronavirus, emergency rate cuts have been implemented, bringing the rate down to an all-time low of 0.25%.

Quantitative easing with YCC has also been introduced.

It seems that the RBA has done everything it can, and what more can be done is a focus of attention.

Also, we will be looking at how the statement describes the current situation and what the outlook is for the future.

◎ Today’s Event Schedule

Euro Area Finance Ministers’ Meeting

Emergency declarations issued in seven prefectures (Japan)

April 7 (Tuesday)

10:30 AUD Australia Trade Balance

13:30 AUDRBA Board Meeting – Policy Rate – Statement Release

16:30 GBP Halifax House Price Index

20:00 MXN Mexico CPI (Consumer Price Index)

23:00 CAD Ivey PMI

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