Reaction to the Brexit negotiation agreement!? - Highlights and schedule for November 26 -

◎ Today's Highlights

1)Digesting the Brexit negotiation agreement over the weekend

Over the weekend, a Brexit negotiation agreement between the UK and Europe was reached. How will the market incorporate this agreement? What should we be watching? The way today’s events are digested will reveal things. If you take this agreement at face value and it is favorably received, the pound may rise. However, if you believe the agreement is unlikely to receive approval in the UK, the pound may move little. If approval cannot be obtained, or if talks about a no-deal Brexit resurface, or if the content of the agreement hints at Prime Minister May being ousted, the pound could fall. Watch the level of the pound and the market’s expectations/price in.

For Brexit negotiation agreement, please also see below
↓↓↓↓↓↓↓↓

Temporary EU summit held, Brexit negotiation agreement!

2)Italy Budget

The European Commission, given the upcoming European Parliament elections next year, hopes to finish the Brexit agreement quickly and address internal European issues. As stated above, the Brexit negotiation agreement is provisional but in place. Next, Italy’s internal issues, the budget and deficit may be addressed. Some weekend reports indicated an increase in short selling of Italian banks’ stocks. Market actions by rating agencies are also of interest.

Italy says it will not revise the budget for now. This week also features release of Italy’s GDP. Attention will be on Italy’s budget, fiscal deficit, stock prices, and long-term interest rates.

Why doesn’t Italy revise its budget? See below!
↓↓↓↓↓↓

Italy vs European Commission: Explaining the true stance on the budget!
　

3)Draghi’s Congressional Testimony

Today, President Draghi will testify to Congress quarterly. In Europe, questions focus on how the Brexit provisional agreement will affect the economy, growth, and fiscal policy; how Italy’s budget will affect Europe; and Draghi’s remarks. The most watched area is the weakness of recent European economic data and whether policy normalization can proceed with Italy and Brexit in mind; can a rate hike be delivered as expected in the fall of next year? All eyes are on this.

4)Oil Prices and Risk-Off

WTI crude prices have fallen to a psychological round number, around $50 per barrel. The risk-off environment continues with oil price declines, dollar strength, yen strength, franc strength, rising VIX, and falling stock prices. It remains to be seen how long the risk-off phase will last.

◎ Today’s Economic Calendar

11/26 (Monday)

G20 Finance Ministers Meeting

06:45 NZD Quarterly Retail Sales
07:15 AUDRBA Governor Lowe Remarks
12:00 AUD Kent, Deputy Governor of the RBA Remarks
18:00 EURPlatinum (Praet?) ECB Executive Board Member Remarks
21:00 EURNowotny, Austrian National Bank President Remarks
21:00 EURKule ECB Governing Council Member Remarks
23:00 EURDraghi, President Remarks

11/27 (Tuesday)

G20 Finance Ministers Meeting

03:00 USD 2-year Bond Auction
03:30 GBPCarney, BOE Governor Remarks
06:45 NZD Trade Balance

◎ Weekly Schedule

Brexit Final Stage: Expectations of European countries and the UK – Focus for the Week of Nov 26