Attention-grabbing Trump Risque! ~ Highlights and Schedule for January 8 ~
Yesterday's USD/JPY did not reach the forecast ISM Non-Manufacturing Index, yet the downside was limited. Specifically, there was a broad dollar decline, but with a risk-off rebound, yen selling advanced and the dollar/yen remained range-bound on a weaker dollar and weaker yen. The risk-off recovery is also lifting stock prices, commodities, and index futures.
◎ Today's Points of Focus
1) U.S. Budget and Mexico Border Wall Construction
Regarding the construction of the Mexican border wall, President Trump is scheduled to deliver a televised address tomorrow at 11:00 (Japan time). He stated that the wall would be built even by declaring a state of emergency. The budget bill has not yet passed. The government has been partially shut down for three weeks. It is increasingly taken as normal, but it remains a source of risk. There may also be no trade balance release today. Watch for any remarks or progress on the budget, the Mexico border, and illegal immigration.
2) U.S.-China-North Korea Relations
Chairman Kim is said to be in China to meet with President Xi Jinping ahead of a U.S.-North Korea summit. He is planned to stay until the 10th. North Korea may want China’s backing. China may hope this could advance talks with the United States. It will be important to see what comes out of this China-North Korea meeting. Also, observers are curious about President Trump’s reaction to this situation. U.S.-China trade talks are ongoing. Will anything occur that could affect their contents? Could there be implications for U.S.-China stock markets? Stay tuned.
3) Brexit Issues
Starting tomorrow, the UK Parliament will begin negotiations toward a vote on the Brexit deal that was postponed in December last year. A vote is expected by the 15th. Will the Brexit deal pass in the UK and Europe, or could it fail to pass and result in a no-deal Brexit? This is a focal point. Also, due to concerns about a no-deal Brexit and the lack of clarity on the withdrawal process, banks, insurers, and asset management firms in the UK are reportedly planning to move parts of their assets to the European Union. It is said these assets could be around £800 billion (about ¥111 trillion). If this information is true, the timing of such moves is unknown, but if it happens, there could be selling of pounds and buying euros of around £800 billion. Stay tuned for additional information.
◎ Today's Economic Calendar
Tuesday, January 8
09:30 AUD Trade Balance
17:30 GBP Halifax House Price Index
19:00 EUR Euro Area Consumer Confidence
22:30 USD Trade Balance
22:30 CAD Trade Balance
Wednesday, January 9
03:00 USD 3-Year Bond Auction
09:30 AUD Building Approvals
