Will there be a pound crash!? A week to watch: the vote in the British Parliament draws attention ～ Highlights and schedule for the week of January 14 ～
There are rumors that the recent flash crash could occur again during Japan's Golden Week. However, crashes typically do not occur when people are watching and warning about them. Personally, I think the suspicious time is the early hours of the 16th this week.
I want to be cautious of a pound crash.
◎ This Week's Highlights
1) Parliament vote on Brexit deal
On the 15th (early hours of the 16th in Japan), the UK Parliament will vote on the Brexit deal. The exact voting time is not yet known, but I would expect the result to be between 3:00 and 6:00 a.m. Japan time on the 16th.
What to watch in Parliament is not whether it will pass or fail, but what happens after a failure. If it fails, an alternative proposal must be put forward within three days, but anything could happen—possible prime minister replacement, dissolution of Parliament, or a no-confidence vote from the Labour Party. There's even rising expectation for a second referendum.
The pound is expected to move sharply. It could also affect the dollar, euro, and yen. A period of low liquidity could see moves, raising the possibility of another crash like the previous one. Some brokers are raising margin requirements for the pound. I will keep an eye on position adjustments.
Regarding post-vote moves, bookmaker predictions were mentioned in the following article. I have included the link.
2) US budget proposal and partial government shutdown
Because the budget proposal was not approved at the end of last year, some government agencies remain shut. The shutdown has lasted 22 days, the longest in history. This shows President Trump’s strong commitment to building the wall at the Mexico border. The shutdown may continue to extend.
The partial government shutdown is affecting various areas. Economic indicators from the government are delayed, economic activity slows, and concerns about the redemption of government bonds are rising. Credit rating agencies are reportedly considering reassessing the U.S. debt rating due to these concerns.
When the budget approval will come is a key point of focus.
3) US large-cap earnings and stock market
This week, US corporate earnings are scheduled. As with Apple’s recent downward revision, earnings can influence stock prices and even currency movements.
There are talks that tariffs and the US-China trade war are starting to show effects. Pay attention to the earnings details as well.
4) Turkish policy rate
In Turkey, the central bank and President Erdogan are at odds over rate cuts. Given current price levels, an interest rate hike may not be strictly necessary, but cutting rates could trigger another Lira depreciation. Most expect the TCMB to hold rates, but the president continues pressure to cut. Emerging markets are prone to surprises, so close attention to Turkey’s monetary policy is warranted.
◎ This Week's Economic Event Schedule
Monday, January 14
17:30 SEK Sweden CPI (Consumer Price Index)
19:00 EUR Euro Area Industrial Production
UK Parliament – Brexit deal vote
16:45 EUR France HICP (Consumer Price Index)
17:00 EUR Spain HICP (Consumer Price Index)
19:00 EUR Euro Area Trade Balance
22:30 USD PPI (Producer Price Index)
00:00 EURDraghi ECB President Speech
03:00 USD George/ Kansas City Fed President Speech
08:30 AUD Westpac Consumer Confidence
16:00 EUR Germany HICP
18:15 GBPCarney BOE Governor Speech
18:30 GBP CPI
19:00 EUR Italy HICP
20:00 TRYTurkey Policy Rate Announcement
22:30 USD Retail Sales
00:30 USD Crude Oil Inventories
04:00 USD Beige Book (Beige Book—regional Federal Reserve economic report)
08:30 USD Kashkari/Minneapolis Fed President Speech
09:01 GBP RICS Housing Price Balance
09:30 AUD Housing Loans
19:00 EUR Euro Area HICP
20:00 EUR Lautenschläger ECB Executive Board Member Speech
22:30 USD Philadelphia Fed Manufacturing Index
00:45 USDQuarles FRB Vice Chair Speech
06:30 NZD NZ PMI
18:00 USD IEA Monthly Report
18:30 GBP Retail Sales
22:30 CAD CPI
Germany’s Christian Social Union (CSU) elects new party leader
00:00 USD University of Michigan Consumer Confidence
03:00 USD Baker Hughes Rig Count
