Today, overlapping with the weekend, end of month, and quarter-end, reconsider investment strategies based on the results of the U.S.-China summit! [From Tetsu Eｍori's newsletter]
From the investment newsletter “Real Trading Strategy by Tetsu Emori” by GogoJungle, here is a small excerpt from this morning’s distribution.
〔CURRENCY MARKET〕
USD/JPY moves little. With a direct meeting between the U.S. and China presidents expected to take place this weekend, traders are adopting a cautious stance, resulting in limited movement around the 107 yen level. The U.S.-China leaders are anticipated to discuss trade issues at a direct meeting in Osaka for the G20 summit on the 29th. Amidst conflicting press coverage about the meeting, there were moments when the yen weakened, but once U.S. time began, active trading was restrained. The seasonally adjusted Q1 GDP annualized growth rate remained at 3.1% quarter-on-quarter, unchanged from the preliminary estimate, keeping a high level, but the market impact was limited. The euro-dollar remained in the upper teens of $1.13. The G20 will be held for two days starting the 28th, and a meeting between President Trump and President Xi Jinping is scheduled for 11:30 a.m. on the 29th. NEC Chairman Kudlow said that there are no preconditions for talks with China and no specific agreement prepared before the U.S.-China leaders’ meeting. In financial markets, there is a pricing in of a July U.S. rate cut. According to CME Group’s FedWatch, the number of rate cuts priced in for this year is at least three. The probability that a 25 basis point cut occurs in July is 100%, and the probability that a 50 basis point cut is implemented by September is over 70%.
【Currency Trading Strategy】
We will maintain our short positions in USD/JPY. A rebound seems likely, but with the G20 and U.S.-China leaders’ meeting approaching, the trend remains until it clearly breaks above 108. If you want to avoid weekend or month-end positions, you may consolidate for now. Today is weekend, month-end, and quarter-end, so do not force holdings; after observing the results of the U.S.-China leaders’ meeting, reconsider your investment strategy. The week will begin in July, entering the second half of the year, and events will pile up from the start of the week. Bank of Japan Tankan, ISM Manufacturing Index, and U.S. payrolls at the end of the week are all in focus. The market will be watching those results as well. Since USD/JPY is testing a rebound from being oversold, a rise is not surprising. Also, the yen shorts and buybacks have progressed significantly. In that sense, there is a possibility that USD/JPY long positions will resume increasing. The remaining step is to respond while watching the movement of Japanese stocks.
In Japanese politics, the dissolution of the House of Representatives has been postponed, removing the factor that could push July stock prices higher. After the Upper House elections, U.S.-Japan trade negotiations are expected to become more active. Although talks have already begun, the situation is difficult for Japan. In these negotiations, there is nothing to benefit Japan; it would only give a gift to the United States. In that case, a yen depreciation is unlikely. Moreover, based on this year’s Nikkei average price movement pattern, the probability of a stock decline in August is 100%. This is also a risk for yen appreciation. Therefore, if USD/JPY rebounds, it could become a selling opportunity. If it approaches close to 109 yen, consider shorting.
We must continue to monitor international developments and domestic political movements. Even if July plays out as an optimistic scenario, the expiration date would be the end of July. Consumption tax increases from October are also on the horizon. By the end of the year, market conditions are expected to become harsh. The risks of stock declines and yen appreciation are likely to become apparent after August. This year, August is seen as a tough month.
EUR/JPY will be kept long.
EUR/USD will be kept long.EUR/GBP will be kept long.
GBP/JPY will be kept short.
GBP/USD will be kept long.AUD/JPY will be kept long.
AUD/USD will be kept long.ZAR/JPY will be kept long.
USD/ZAR will be kept short.TRY/JPY will be kept long.
USD/TRY will be kept short.NZD/USD will be kept long.
USD/CAD will be kept short.
USD/MXN will be kept long.Emerging market currencies are volatile, so keep position sizes to one-quarter of major currencies, and there is no need to force positions.
『Real Trading Strategy by Tetsu Emori』 (Tetsu Emori)quote.
There are many fundamental factors from this weekend’s G20 to next week’s U.S. jobs report. Let us rethink a long-term investment strategy for the latter half of this year here (Editorial Department)
