U.S.-China Midterm Elections, Voting and Tabulation! A Week of Global Risk Reassessment ~ Outlook and Schedule for the Week of November 5

◎ This Week's Highlights

1）U.S. Midterm Elections

This week's biggest point of attention,U.S. Midterm Elections！

President Trump has made various statements and policy moves toward the U.S. midterm elections.It is common that the flow changes after the midterms. Also, this election is a closely fought contest. We need to anticipate several potential scenarios and stories after the election. For that reason, attention is high.Election results will be on the 6th (counting starts early on the 7th Japan time).In U.S. elections, the Tokyo market is the first to be affected, followed by reactions from European and American markets, and then the next Tokyo session. I will be watching risk management and the outlook for the future.

Details and forecasts for the midterm elections will be summarized separately.

2）RBA・RBNZ・FOMC

This week,three central banks’ policy rates and statementswill be announced for three currencies. All are expected to hold rates, but the focus is on the statements.

・FOMCwill be held without a press conference, and a hold is expected. The Federal Reserve has priced in one rate hike later this year (December FOMC). Therefore, attention is on how many rate hikes will occur next year. Personally, I am also watching for the impact of tariffs and the trade war. While the Bank of Japan, ECB, and Bank of England have flagged protectionist policies as concerns, the Fed has not yet commented. I will be looking to see if the statement mentions protectionist policies this time.

・RBAis expected to hold. So the statement is also important. Although the U.S.-China trade war (U.S.-China cold war) recently moved toward resolution, Australia is worried about China’s economy slipping because of tariffs. As the Chinese and Australian economies are closely linked, what the RBA sees will influence its future rate-hike outlook. In the previous statement, they said the next move in monetary policy would be a rate hike, so I expect that the outlook will inform the timing of the next hike based on new guidance.

・RBNZis not expected to raise rates, but given the economy is strong, market participants will still look for rate hikes. New Zealand’s economy is closely tied to Australia’s, so it will indirectly feel the Chinese influence. However, recent indicators have been strong, and the inflation rate near the midpoint of the RBNZ’s target is resulting in higher prices. I will be watching where the RBNZ focuses and where it feels uncertainty, and what reforms the RBNZ is implementing in the statement.

3）Downside risks to U.S.-China issues！ Global risks?

Last week,President Trump’s remarks on trade with Chinacaused a suddenrisk-on (risk assets up) recovery. The improvement in U.S.-China relations is welcomed, but globally risks remain.U.S. faces caravan and refugee issues.Europe faces Brexit negotiations and Italy's budget issues.The U.K. faces Brexit negotiations and government issues。In the Middle East, Iran sanctions and Syria airstrikes. Risks are smoldering everywhere. However, markets view the U.S.-China cold war as the top risk, and with signs of improvement in U.S.-China relations, risk-on moves have been made. This week, I expect to see whether risk-on will continue or whether attention will shift to other risks causing another risk-off. The midterm elections are the biggest risk, and I will be watching how much risk recedes after the midterms.

◎ This Week's Economic Events Schedule

11/4 (Sun)

New York ends daylight saving time (switch to standard time)

11/5 (Mon)

U.S. imposes the second round of sanctions on Iran (oil embargo)

08:50　JPYBOJ Policy Meeting Minutes
10:00　JPY　Kuroda BoJ Governor speech
10:45　CNY　Caixin Services PMI
16:00　TRY　Turkey CPI
18:30　GBPService PMI
21:45　EUREnd-inflation ECB Vice President Draghi
23:45　USD　Service Sector/Composite PMIs

11/6 (Tue)

U.S.-China Midterm Elections

00:00　USD ISM Non-Manufacturing PMI
12:30　AUDPolicy Rate/Statement release
16:30　EUR　Prakt ECB Executive Board member comment
17:15　EUR　Spain Services PMI
17:30　SEK　Sweden Industrial Production
17:45　EUR　Italy Services PMI
17:50　EUR　France Services PMI
17:55　EUR　Germany Services PMI
18:00　EUR　Eurozone Services PMI
20:15　EUR　Clarida ECB Executive Board member speech
21:00　EUR　Lautenschlager ECB Executive Board member speech

11/7 (Wed)

06:45　NZDUnemployment rate and employment change
11:00　NZDForecast inflation rate

05:00　NZD

04:00　USD
09:30　AUD



18:00　GBP

11/10 (Sat)