Is the week where the euro, pound, and dollar attract attention!? ~ Highlights and event schedule for the week of October 1 ~

◎ This Week's Highlights

1)Euro Decline and Italy's Budget

Towards the end of last week, the euro fell sharply. I think the cause of the euro's decline might be Italy's budget. Will the decline continue next week due to the budget, or will there be a temporary stabilization?

↓↓↓ Please refer to the summary below regarding Italy's budget ↓↓↓

From Italy: Could there be a fiscal crisis!? A解planation of Italy's budget and the euro decline!!

2)Will new highs continue? Dollar strength and emerging-market currencies

With the FOMC raising rates, U.S. long-term yields rose. The USD/JPY has hit a fresh high for the year. If U.S. interest rates rise, concerns arise for emerging-market currencies. Although EM currencies have regained some stability, U.S. long-term rates are rising again. Watch for capital outflows from EMs and EM currencies. Moreover, the USD/JPY has reached a new high for the year. The dollar is strengthening against other currencies as well. Will this continue to rise, or will President Trump’s criticism of a strong dollar emerge? Stay tuned.

↓↓↓ For FOMC, see below ↓↓↓

A 0.25% rate hike and FOMC explained!

3)UK Conservative Party Conference Starts

From the 30th, the UK Conservative Party Conference has begun. As Brexit negotiations approach a deadline, Ireland issue remains unsettled, and the EU summit ended in apparent failure. Criticism of Prime Minister May is growing domestically. From within the Conservative Party, hardliners are discussing other proposals, and there are rumors of May's resignation or dissolution—likely to bring upheaval. The party conference is more scrutinized than Japan might think. I will watch for potential headlines.Prime Minister May is scheduled to speak on the 3rd at 18:30 (Japan time). This is the main event to watch.

↓↓↓ For the UK party conference, please also refer to the following ↓↓↓

May's explosive appearance!! Strong statements on Brexit negotiations!!

4)Trade negotiations with China and Japan

U.S.-Japan trade talks and the U.S.-Japan summit passed without incident. Technically, the issues were postponed. In such a context, as noted above, the USD/JPY has reached new highs. President Trump is irritated by the dollar strength and Federal Reserve rate hikes. There is a possibility that the U.S.-Japan trade talks, considered resolved, may be raised again.

Moreover, U.S.-China tariffs and the trade war continue to deteriorate. Trump’s irritation could shift toward China. The already strained U.S.-China relations could impact not only China but Australia and EMs connected to China. The course of future trade negotiations is in focus.

5)U.S. Balance Sheet Reduction Pace

The balance sheet reduction began last September. If on schedule, a substantial acceleration is planned from October. I will watch U.S. Treasuries and stock prices going forward.

↓↓↓ For balance sheet reduction, please refer to the previously summarized article ↓↓↓

About the balance sheet reduction

◎ This Week's Event Schedule

9/30 (Sunday)

UK Conservative Party Conference
New Zealand: Daylight Saving Time begins

10:45　CNY　NBS Manufacturing PMI

10/1 (Monday)

UK Conservative Party Conference

07:30　AUD　Manufacturing PMI
15:30　SEK　Sweden Manufacturing PMI
16:45　EUR　Italy Manufacturing PMI
16:50　EUR　France Manufacturing PMI
16:55　EUR　Germany Manufacturing PMI
17:00　EUR　Eurozone Manufacturing PMI
17:30　GBPUK Manufacturing PMI
18:00　EUR　Eurozone Unemployment Rate
22:00　USDBlockish/Atlanta Federal Reserve President speaking
22:45　USD　U.S. Manufacturing PMI
23:00　USDISM Manufacturing Index
23:50　GBPTenreiro BOE External Director Speaking

10/2 (Tuesday)

UK Conservative Party Conference

00:00　USD　Kashkari (Minneapolis Fed) speaking
01:15　USD　Rosengren (Boston Fed) speaking
13:30　AUDPolicy Rate/Statement Release
17:30　GBPUK Construction PMI
17:45　GBPHolden BOE Chief Economist speaking
23:00　USDQuarles (Fed Vice Chairman) speaking(Senate testimony)

10/3 (Wednesday)

UK Conservative Party Conference

01:00　USDPowell Fed Chair speaking
10:30　AUD　Housing Permits
15:30　SEK　Sweden Services PMI
16:00　TRYTurkey CPI
16:50　EUR　France Services PMI
16:55　EUR　Germany Services PMI
17:00　EUR　Eurozone Services PMI
17:30　GBPUK Services PMI
18:30　GBPMay's speech at the Conservative Party Conference(Scheduled)
19:30　USD　Evan's (Chicago Fed) President speaking
21:05　USDBarkin (Richmond Fed) President speaking
21:15　USDADP Employment Report

23:00　USDISM Non-Manufacturing Index

10/4 (Thursday)

03:00　USDBrainard (Fed Governor) speaking
03:15　USDMester (Cleveland Fed) President speaking
10:30　AUD　Trade Balance
22:15　USDQuarles (Fed Vice Chairman) speaking
22:30　EUR　Novotny (Oeurozone Central Bank) President speaking23:00　CAD　Ivey Purchasing Index
23:00　CAD　Ivey Purchasing Index

10/5 (Friday)

02:00　EUR　Couré ECB Board member speaking
03:00　MXN　Mexico Policy Rate announcement
10:30　AUD　Retail Sales
21:30　CADEmployment Change, Unemployment Rate, Trade Balance
21:30　USDNFP, Unemployment Rate, Average Hourly Earnings, Trade Balance

10/6 (Saturday)

01:40　USDBostic (Atlanta Fed) President speaking
02:00　USD　Baker Hughes Rig Count

※ Bloomberg