Featured events and highlights for Tuesday, August 21st!! + a recap of yesterday's events~

8/21 (Tuesday)

Turkish market closed (Sacrifice Festival)

07:00　AUDLow RBA Governor speech
10:30　AUDRBA minutes release(for August 7)
21:00　HFUHungary policy rate announcement
21:30　CAD　 Wholesale Sales

8/22 (Wednesday)

Turkish market closed (Sacrifice Festival)
U.S.-China deputy-level trade talks

02:00　USD　2-year bond auction
07:45　NZDQuarterly retail sales
12:10　AUDRBA Deputy Governor Debelle speech

◎ Today’s notable events and focus

TodayRBA minutes(for August 7) will be released.

Australia has strong ties with China, and recent declines in Chinese stock prices may have a large impact.

RBA says “the next move (monetary policy) will be an increase in rates, but the timing is not specified.

What is influencing the timing of a rate hike!?

What are the concerns!?

What was discussed!?

The minutes will reveal the key points for Australia’s economy going forward.

China A50 daily chart

AUD/USD daily chart

AUD/USD intraday chart

Viewed on a time-frame, AUD looks to have a small rebound, but the upside seems heavy.

What matters is whether the above time-frame chart’s ”yellow circle” can be broken upward.

Australia (RBA) will continue to have speeches from the governor and deputy governor, so I will pay attention to the content as well.

Other notable expectationsResumption of U.S.-China trade talks will occur.

According to some reports,deputy-level rather thanthe heads of statewill conduct the talks.

Resuming trade talks could ease U.S.-China risk, but at deputy level there may still be questions.

Even this morning, President Trump’s remarks suggest that U.S.-China relations won’t be easily resolved!

“China and Europe manipulate their currencies”
“Don’t expect much from China in this week’s trade talks”
“There is no deadline to resolve the U.S.-China trade frictions”

Additional tariffs are scheduled to be imposed on the 23rd.

I will watch for any progress in the talks.

USD/CNY time-frame chart

Other focus includes Turkey as well.

Turkey market closed yet statements may come out.

Yesterday, Merkel’s remarks caused modest lira weakness.

Turkey issues also affect Europe.

Statements from Europe, China, Russia, etc., can influence the lira, so watch headlines..

◎ Positions held and today’s strategy

EUR/USD Short was closed at 1.1450 (take-profit).

I expect more downside for EUR due to negative factors.

However, today Trump’s remarks triggered a strong dollar sell-off.

As the impact of Trump’s remarks subsides, I expect renewed dollar buying and euro selling.

”1.1500” ～ ”1.1560”, I would like to re-enter short EUR/USD around those levels.

EUR/USD daily chart

EUR/USD intraday chart

CAD/JPY Long is still held.

Yesterday, commodity currencies rose, but the yen strengthened, so CAD/JPY gains were limited? It declined somewhat.

Also, Wilkins, Deputy Governor of the BOC, is scheduled to speak but will pass quietly.

Next, Powell’s Jackson Hole speech (25th) is anticipated with BOC President Poloz’s remarks.

I plan to continue holding CAD/JPY.

Major eight currency strength/weakness chart for the 20th

As for USD/JPY,Trump’s remarks andBošticek (Bed?) Atlanta Fed President’s remarks pushed it lower. andBošticek (Bed?) Atlanta Fed President’s remarks pushed it lower.

Even within a narrow range, the downward pressure intensified after their remarks.

Watch whether it breaks 110.00 or rebounds.

President Trump said,

“The Fed should do good for the country”
“The Fed should help the President more”
“I don’t think Powell’s rate hikes are good”
“If Powell doesn’t keep rates low, I’ll be unhappy”

and criticize the Fed and Chairman Powell.

Also, Trump’s rhetoric... again, perhaps.

However, some view thatTrump is highly intelligent and sharp.

Ahead of Jackson Hole, such remarks can be seen as a pressuring stance.

Hawkish stance after Bošticek’s remarks may have been planned, perhaps not merely accidental.

USD/JPY daily chart

USD/JPY intraday chart

Boštičk, a voter in 2018 FOMC, has recently been dovish in his remarks.

“The economy does not require excessive stimulus as before”
“The Fed is gradually moving toward neutral rates”
“The measures that were once required are not currently necessary”
“Concerns about flattening yield curves””
“The Fed is doing well in achieving inflation targets”
“Expect one more rate hike this year”
“Fed’s independence is crucial and leads to better policy”

Earlier, the market had anticipated four hikes this year, with two more in Sep and Dec, but comments now imply only one more hike this year.

Attention on this week’s FOMC minutes and the Sep FOMC meeting.

※ Reference on Boštičk’s yield-curve remarks

◎ Today’s key long-term rates

US 10-year yield chart

Japan 10-year yield chart

Germany 10-year yield chart

Italy 10-year yield chart

Spain 10-year yield chart

Greece 10-year yield chart

Turkey 10-year yield chart

◎ Yesterday’s notable remarks

Recep Tayyip Erdoğan, Turkish President
“Attacks on Turkey’s economy are the same as attacks on Turkey’s flag.”
“The aim of the Turkish currency crisis is to kneel down Turkey and its people and capture them.”
“Those who think they can force Turkey to yield via exchange rates will realize their mistake.”

Moscovici, European Commissioner for Economic and Monetary Affairs
“Britain’s Brexit decision could theoretically be reversed.”

Angela Merkel, German Chancellor
“There is no immediate need to provide emergency aid to Turkey.”

Bošticek, President of the Atlanta Fed
“The economy no longer needs excessive stimulus”
“The Fed is moving toward neutral rates gradually”
“The previously required stimulus is not currently necessary”
“Concerns about yield-curve flattening”
“The Fed is doing very well toward achieving inflation targets”
“Expect one more rate hike this year”
“Fed independence is very important and leads to better policy”

Trump, U.S. President
“Dissatisfaction with Powell’s rate hikes”
“Discontent with Powell not keeping rates low”
“China and Europe manipulate their currencies”
“I don’t think Powell’s rate hikes are good”
“The Fed should do good for the country”
“The Fed should help the President more”
“Don’t expect much from China this week in trade talks”
“There is no deadline to resolve China trade frictions”