Controversy in the UK Withdrawal Bill vote!? Next up: Waiting for the FOMC! ~ Points of focus and schedule for January 30 ~

This morning the pound is extremely volatile. Several amendments to the UK's EU withdrawal bill have been voted on, but since the results differed from expectations, the pound has fallen sharply. Regarding the pound, every time a prominent figure speaks there is a risk of a heightened reaction, but for other currencies the market seems set to drift ahead of the FOMC and Powell’s remarks.

◎ Today’s Highlights

1) FOMC

The focus this time is on the FOMC occurring while the government shutdown prevents data from lining up, and the impact of the shutdown on the economy is becoming evident. All eyes will be on what is said.

A hold is expected, and if guidance hints at rate hikes for the future, the dollar could rise. Conversely, if the number of rate hikes is left open-ended depending on conditions, the dollar might fall.

2) U.S.-China Trade Talks

From today, trade discussions between the U.S. and China will commence. With tariffs having a major impact, all eyes will be on whether additional tariffs will be imposed or if tariffs will be reduced or removed.

However, given the ongoing prosecution of Huawei’s CFO, this does not look straightforward. The U.S. side may be pushing not just about the trade deficit but also intellectual property issues involving companies like ZTE and Huawei, which could be added to the talks. It will be interesting to see how China handles this.

Basically, the expectation is that the current situation won’t change much. If conditions improve even slightly, we could see a risk-on move; if additional tariffs or the talks stall, risk-off could occur.

3) UK Withdrawal Negotiations

This morning in Parliament, votes were held on amendments and alternative proposals to the withdrawal plan, but the anticipated extension of the withdrawal deadline was rejected. Prime Minister May’s withdrawal plan was approved, but there are still many unresolved issues, creating considerable uncertainty. Ireland’s European minister has already voiced opinions. I plan to summarize in more detail separately, but going forward there will likely be many amendments and statements regarding the withdrawal plan, and the pound is expected to react each time.

It is not yet known whether the EU will be satisfied with the withdrawal plan. The EU’s reaction is also something to watch.

◎ Today’s Economic Schedule

Wednesday, January 30

09:30 AUD Quarterly CPI (Consumer Price Index)

16:00 EUR Germany Consumer Confidence

19:00 EUR Euro Area Consumer Confidence

22:00 EUR Germany HICP (Harmonised Index of Consumer Prices)

22:15 USD ADP Employment Report

22:30 USD GDP (Advance)

23:00 MXN Mexico GDP

Thursday, January 31

00:30 USD Crude Oil Inventories

04:00 USDFOMC Interest Rate Decision and Statement

04:30 USDPowell, Chair of the Federal Reserve, Press Conference

09:01 GBP Consumer Confidence

10:00 CNY China Manufacturing PMI