Brexit plan, US-China relations, government shutdown, and risk events: A week to watch! ～ Highlights and event schedule for the week of January 21 ～
Last week, although the Brexit bill was rejected in the UK, expectations for improved US-China relations and other factors led to a partial recovery from risk-off... The risk-off trend has retreated. Equities showed a slight rebound, and the VIX index and gold prices declined. The yen and the franc have been weakening. Will the trend continue this week? Or...
◎ This Week’s Points of Focus
1) The UK Parliament and an Alternative to the EU Withdrawal Agreement
The EU withdrawal proposal that was rejected last week. Because it was rejected, an alternative proposal must be submitted within three days. The deadline is the 21st. An alternative proposal will be submitted to the UK Parliament on the 21st, and after deliberations, a vote is expected on the 29th.
Three points to watch.
・Which parts of the alternative plan have been revised?
・Will negotiations with the EU be unnecessary for revising the alternative plan?
・What is the possibility of a no-deal Brexit?
In addition, Brexit-related items to watch include whether there will be a request to extend the March 29 Brexit deadline, and how long the extension might be.
Separately, the opposition Labour Party has submitted a call to discuss a second referendum. On the 21st, it is expected that the second referendum will also be discussed.
The pound is expected to be driven by the UK Parliament’s deliberations and statements by key figures, making it a week of headlines and fluctuations.
2) Government Shutdowns and US-China Relations
At the end of last week, the dollar/yen rose. The rumor of lifting tariffs on China pushed it up, and even when denials came out, it did not fall. Subsequently, information suggesting improved US-China relations based on the content of the trade talks caused the dollar/yen to rise again. It’s still based on some agency reports, so will there be a definitive report or a denial? This is to be watched.
Additionally, apart from US-China relations, another US risk to watch is the cost and budget for building the border wall with Mexico and the government shutdown. The shutdown period is the longest on record and will soon reach four weeks. President Trump had said at 5:00 on the 20th (Japan time) that a major announcement would be made about the shutdown, but the content argued for the necessity of building the wall at the Mexican border. This week also seems likely to involve budget negotiations between President Trump and the Democrats, with talks possibly at an impasse. Will the President invoke a state of emergency as a last resort?
About the Government Shutdown and Its Impacts
3) Davos Conference (World Economic Forum Annual Meeting)
The Davos Conference brings together heads of state and key figures. Anticipated topics are likely to focus on protectionism and Brexit. With important figures gathered, significant statements tend to emerge. I will be paying attention to the remarks by key figures.
4) US Corporate Earnings and Stock Prices
This week will feature more US corporate earnings announcements. For major companies, such as...
Jan 22: Halliburton, IBM, Johnson & Johnson, Travelers, Texas Instruments
Jan 23: Abbott Laboratories, Ford Motor, Kimberly-Clark, P&G
Jan 24: American Airlines, Freeport-McMoRan, Intel, Intuitive, Starbucks
and others. Earnings releases can trigger stock price declines and influence exchange rates. Caution is advised.
◎ This Week’s Economic Calendar
Jan 20 (Sunday)
5:00 USD President Trump remarks (on government shutdown)
Jan 21 (Monday)
Prime Minister May submits Brexit alternative proposal
Deliberations on a second referendum
Euro area Finance Ministers’ meeting
11:00 CNY China GDP
Jan 22 (Tuesday)
EU Finance Ministers' Council
Davros Conference (World Economic Forum Annual Meeting)
18:30 GBPEmployment change, unemployment rate, average earnings
19:00 EUR Eurozone/Germany ZEW economic sentiment index
Jan 23 (Wednesday)
Davos Conference (World Economic Forum Annual Meeting)
Abe’s speech (Davos Conference)
06:45 NZDQuarterly CPI
08:50 JPY Trade Balance
Around 12:00 JPY Bank of Japan monetary policy/interest rate announcement
15:30 JPYKuroda, BoJ Governor, press conference
22:30 CAD Retail Sales
Jan 24 (Thursday)
Davos Conference (World Economic Forum Annual Meeting)
00:00 EUR Consumer Confidence
09:30 AUDEmployment change, unemployment rate
17:15 EUR France manufacturing/services/overall PMI
17:30 SEK Sweden unemployment rate
17:30 EUR Germany manufacturing/services/overall PMI
18:00 NOK Norges Bank rate decision
18:00 EUR Euro area manufacturing/services/overall PMI
21:45 EURECB Governing Council and policy rate decision
22:30 EURDraghi ECB President press conference
23:45 USD Manufacturing/Services/Composite PMI
Jan 25 (Friday)
Davos Conference (World Economic Forum Annual Meeting)
01:00 USD Crude oil stockpiles
17:30 SEK Sweden retail
18:00 EUR Germany IFO business climate index
22:30 USD Durable goods and core durable goods orders
Jan 26 (Saturday)
03:00 USD Baker Hughes rig count
