Focus: From Brexit to the U.S. budget and possible government shutdown!? ~Key points and schedule for January 17~
This morning, the UK Parliament rejected a no-confidence motion against the May administration. Since yesterday's Brexit plan was overwhelmingly rejected, there were concerns about Prime Minister May's approval ratings, but she was entrusted with support by a narrow margin. With the no-confidence motion rejected, the risk-off sentiment has somewhat eased. Yen weakness. The euro and the pound have fallen, and the dollar/yen is in the 109 range.
◎ Today's Points of Attention
1) The UK’s New Administration and the Brexit Plan
With the House of Commons rejecting the no-confidence motion against the Cabinet, Prime Minister May has once again gained the confidence of the House. However, even though she gained confidence, it was by only a slim margin; without the support of the Northern Ireland DUP, a change of government could have occurred.
In light of this situation, all eyes are on how Prime Minister May will respond. First, she must submit a substitute for the Brexit plan that was rejected a few days ago within three days. Attention is on which parts she will modify.
Additionally, there is the Brexit deadline extension on March 29. The EU has signaled that an extension is possible if a request is made. It remains to be seen whether a request for an extension will be made, or if, within the deadline, a Brexit deal cannot be approved, whether they will opt for a no‑deal Brexit.
2) U.S. Budget and Partial Government Shutdown
The shutdown of certain U.S. government agencies is beginning to affect various areas. Public opinion polls show that the shutdown is attributed to President Trump, yet they are taking a hard line on the budget. The Democratic Party, having won the midterms, holds a majority in Congress. The Democrats’ firm stance is contributing to a prolonged shutdown.
If the government shutdown continues, it will likely lead to risk-off conditions. I will continue to monitor the budget approval and President Trump’s actions.
3) U.S. Corporate Earnings and Stock Prices
This week, a slew of U.S. corporate earnings reports are being released. Looking at the overall picture of earnings, results appear to be largely in line with expectations or revised downward. Many companies seem to be cautious about the outlook. Earnings season is not over yet, so depending on the results and details, stock prices could fall and risk-off sentiment could intensify, so be cautious.
◎ Today’s Economic Calendar
Thursday, January 17
09:01 GBP: RICS Housing Price Balance
09:30 AUD: Building Approvals
12:20 JPY: Bank of Japan Governor Kuroda speaks
19:00 EUR: Eurozone HICP (Consumer Price Index)
20:00 EUR: ECB Executive Board member Elga Lauden Scharager speaks
22:30 USD: Philadelphia Fed Manufacturing Index
Friday, January 18
00:45 USDQuarles, Vice Chairman of the Fed, speaks
06:30 NZD: NZ PMI
◎ Weekly Schedule
