Not only the China-U.S. issue, but political risks are also emerging in Europe! Will the wave of yen appreciation come again? [From Mr. Tetsu Emi's newsletter]
From the investment email newsletter "Tetsu Emori's Real Trading Strategy" by Tetsu Emori provided by GogoJungle, here is a small portion from this morning's distribution.
〔CURRENCY MARKET〕
USD/JPY fell. With the fall in U.S. long-term interest rates and other factors, yen buying and dollar selling have been dominant, sending the pair to the lower 106s. However, with the release of the FOMC minutes on the 21st and Powell's speech on the 23rd approaching, a cautious mood spread and price movement remained modest.In the market, there is attention on whether Powell will hint at additional rate cuts amid concerns about an escalation of the U.S.-China trade war and the possibility of a recession caused by the emergence of an inverted yield curve. Meanwhile, Italian Prime Minister Conte signaled his resignation in the face of intensified opposition within the ruling coalition. The political uncertainty was heightened, but the market impact was limited.
EUR/USD traded slightly below 1.11. GBP/USD weakened. The EU clearly stated that it would not entertain renegotiation of the Brexit withdrawal agreement sought by UK Prime Minister Johnson. On the solution to the Ireland border issue, the so-called backstop, the UK was criticized for not presenting a "realistic alternative."
【Currency Trading Strategy】
We will stay on the sidelines for USD/JPY. Like the stock market, it is in a range without a clear direction. Currently, it is in a 105 to 107 range. The theory is to expect movement in the direction of breaking out of this range. It is expected to lead to a larger move eventually. For now, treat this as a period to prepare and not take eyes off the market to discern carefully. The possibility still points downward. Therefore, as a strategy, I am considering shorts below 105. Various factors are interwoven, but they still lack sufficient force to move the market. However, it would be premature to think the August yen strength is over. I would like to wait for another move.President Trump is again signaling against the Fed. It seems he wants to avoid a stronger dollar. Also, there has been some political movement in Europe. If the market views these as material, moves may begin. Attention should also be paid to euro and pound movements. These currencies look set to move soon as well. It would be prudent to ride along. Additionally, there is a possibility that the Trump administration will implement tax cuts. Worsening U.S. fiscal health is a bearish factor for the dollar. This has been quite clear from past data. Going forward, the dollar may struggle to rise.
The market will then judge, in comparison with European political turmoil, which is weaker. Also, AUD and NZD may start moving soon. It would be wise to be prepared.
‘Emori Tetsu’s Real Trading Strategy’ (Tetsu Emori)from the quote.
Europe is facing political turmoil, with clouds over Brexit in the UK, and European political risk rising. The focus is on the FOMC minutes to be released today and Powell's remarks this weekend. With concerns about a recession growing, will there be any measures? (Editorial staff)
