What will happen to the British Parliament!? Submission of a Leave Alternative (Plan B)! ~ Highlights and event schedule for January 21 ~

Last week, the dollar/yen rose more than expected. It reached the 104 level on the back of a flash crash, to such an extent that you might wonder what happened. After the flash crash, I think the move was driven by buyers triggering stops when selling dollar/yen. Will the ascent continue? As expectations for a stronger dollar/yen increase, will there be a drop as a shakeout? It seems we are at a turning point.

◎ Today’s Points of Focus

1) UK Parliament

Today, the plan is to submit an alternative to the withdrawal agreement that was rejected last week. In addition,議題 has also been proposed regarding a second referendum.

The United Kingdom’s departure from the EU is reaching a critical point. With a deadline of March 29, only about eight weeks remain, yet Parliament is set to reject the withdrawal agreement. Some analysts predict a move toward a no-deal Brexit. Conversely, views vary: some expect agreement to be reached to avoid a no-deal Brexit, others expect the EU to concede again, and some anticipate an extension of the Brexit deadline for renegotiation. Analysts’ opinions are mixed.

Due to the lack of clarity, liquidity in the pound may be low. In such a context, headlines can cause big moves and price swings. The announcement of an alternative to the withdrawal agreement is said to be at 15:30 London time (00:30 on the 22nd Japan time). While not confirmed, I want to stay vigilant.

※Refer to DMM Online Salon “FX Way of Trading”

2) US-China Relations

From information that emerged at the end of last week: “In early this month, in Beijing, during the US-China trade talks, China proposed a six-year plan to expand imports from the United States”“China proposed increasing imports from the United States by more than $1 trillion annually, aiming to reduce the trade surplus with the United States.”This news boosted expectations for improvement in US-China relations and reduced the risk-off sentiment. The yen and the won have been weakening. However, since this information comes from some news agencies, we should watch for confirmation or denial reports. Personally, I question whether China can actually increase imports from the United States enough to eliminate its trade surplus.

Today, China’s GDP is released. I’m watching how much the US-China tariff impacts are reflected. We may have already priced in some deterioration, but a substantial deterioration could again trigger risk-off flows.

3) Government Shutdown

Yesterday, President Trump gave a speech on the government shutdown. He argued for the necessity of building a wall on the Mexican border. However, he proposed a modest compromise regarding illegal immigration. In response, the Democrats expressed rejection soon after the speech. Negotiations on the budget have not yet yielded a clear outlook, and the shutdown is likely to prolong. If the shutdown continues, I think risk-off pressure may intensify.

On the shutdown and its impacts

◎ Today’s Event Schedule

Monday, January 21

May expresses intent to submit an alternative to the EU withdrawal

Deliberations on a second referendum

Euro area finance ministers meeting

11:00　CNY　China GDP

◎ Weekly Schedule

Focus on UK withdrawal, US-China relations, government shutdown, and risk events this week! ~ Focus points and event schedule for the week of January 21 ~