Key Points and Strategy for Friday, August 17

8/17 (Friday)

07:30 NZD Q/Q PPI
08:30 AUDRBA Governor Speech (Semi-annual parliamentary testimony)
16:30 AUDSpeech by RBA Deputy Governor Ellis
18:00 EUR CPI (Consumer Price Index)
21:30 CADCPI (Consumer Price Index)
23:00 USD University of Michigan Consumer Sentiment Index

8/18 (Saturday)

02:00 USD Baker Hughes Rig Count

◎ Today’s Highlights

The biggest highlight isCanada CPI (Consumer Price Index).

Among recent economic indicators,Canada CPI (Consumer Price Index)is the indicator that moves the most.

Last month it didn’t move much, but it still moved as follows.

Also,CPI levels have surpassed 2%,so the timing of rate hikes is quite near.

I have high expectations for this indicator trade.

CAD/JPY 10-second chart

Also,RBA hawkish comments are noteworthy.

Australia is closely tied to China, and due to the recent U.S.-China trade war, AUD has continued to decline.

Because it is a parliamentary testimony, it is a point of focus.

Other items include,S&P’s Turkey sovereign rating review is scheduled.

Turkish-related matters seem to have calmed, but there is still a risk of further turbulence.

This week started with a wide gap, so depending on the weekend, next week could also open with a large gap.

I want to carefully manage positions and risk.

For Turkey, I’ve summarized below for reference.

Continued: Turkey Shock Summary. The Turkish problem is not just about Turkey!!

I also want to keep an eye on the Chinese yuan.

Yesterday, comments from the Chinese Ministry of Commerce said,that U.S.-China trade talks will resume.

The resumption of trade talks itself is a positive factor.

It contributed to risk reduction.

However, if the yuan continues to weaken, it could hamper trade talks, so I will monitor the yuan closely.

In yesterday’s reports, “the People's Bank of China resumed open market operations after 20 business days.”

The yuan was bought back sharply, but at one point it hit a 1.5-year low.

◎ Positions currently held and strategy for today

EUR/USD short: take profit on additional position.

Core positions are held.

Set a stop at EUR/USD “1.1450”.

EUR/USD Daily Chart

EUR/USD Timeframe Chart

Since the 16th, UK and EU have resumed Brexit talks.

There could be comments on Brexit negotiations progress.

Also, UK politics can move over the weekend, so beware.

The pound appears to be on a downtrend,pricing in a no-deal Brexit (breakdown of negotiations).

However, positive news could lead to a sharp rebound.

Pound is a high-risk, uncertain situation.

Long-term holding should be avoided; I will short-term trade based on statements.

GBP/JPY Daily Chart

GBP/JPY Timeframe Chart

GBP/USD Timeframe Chart

The USD/JPY remains in a range.

Technical top is heavy; bottom is solid.

Moreover, there are no major U.S. indicators today, so the market may be range-bound.

USD/JPY Timeframe Chart

If Turkey and U.S.-China trade tensions were not present,it would be a quiet market, a summer lull..

In such markets, small shifts in positions can cause big moves.

Generally, assume a休みに, and avoid taking on positions beyond clear setups.

I aim not to incur unnecessary losses as much as earning profits.

Just as important as earning profits is reducing losses, so today I will focus on minimizing losses.

◎ Yesterday’s Key Statements

Guajardo, Mexican Secretary of Economy
“We aim to reach an agreement on NAFTA with the United States within this month.”

Ministry of Commerce of China
“Chinese Vice Minister of Commerce will visit the United States in late August for talks.”.

IMF spokesperson
“IMF has not received any request for financial assistance from Turkish authorities.”.

Presidency of Russia
“A tripartite summit of Russia, Turkey, and Iran is planned for early September.”.”

NEC Chairman Kudlow

“Chinese delegation is in the U.S. for talks.”
“Trade talks with Mexico are progressing.”
“Stability of the dollar is a sign of confidence in the U.S. economy.”
“President Trump is dissatisfied with Turkey on trade.”
“The detention of the American pastor has nothing to do with steel tariffs.”
“A strong dollar reflects confidence in the U.S. economy.”

Albayrak, Turkish Finance Minister
“Capital controls will not be considered.”

French Presidency
“President Macron and President Erdogan discussed Turkey’s economy and financial markets.”
“President Macron pledged support to Turkey’s economy.”

Mnuchin, U.S. Treasury Secretary
“If the pastor is not released, we will prepare additional sanctions.”

President Trump
“China will probably not propose terms we can accept.”

Turkish Foreign Minister Cavusoglu
“Turkey and the United States can resolve their issues.”
“The U.S. does not know who its true friends are.”