Upcoming events of August 23 (Thursday) and key points!! ~ with yesterday's recap ~

8/23 (Thursday)

Turkish market closed (Sacrifice Festival)
U.S.-China trade talks(Deputy-level)
Kansas City Fed-hosted Jackson Hole Summit
U.S.-China (USD 16 billion) additional tariffs planned

15:00 NOK Norway GDP
16:00 EUR France services & manufacturing PMIs
16:30 SEK Sweden unemployment rate
16:30 EUR Germany services & manufacturing PMIs
16:30 EURWeidmann, President of the German Bundesbank, remarks
17:00 EUR Eurozone services & manufacturing PMIs
20:30 EURECB meeting minutes released(for July 26)

8/24 (Friday)

Turkish market closed (Sacrifice Festival)
Kansas City Fed-hosted Jackson Hole Summit
Note: Powell, Fed Chair, scheduled to speak

07:45 NZD New Zealand trade balanceNZD trade balance
08:30 JPY Japan CPI (Consumer Price Index)

◎ Today’s focus

1)Jackson Hole Summit

Starting today, the Kansas City Fed hosts the Jackson Hole Symposium.

It is a symposium where many central bank chiefs, deputy chiefs, and economists gather.

Jackson Hole is like this place.

A vacation/ resort area.

[caption id="attachment_1803" align="alignnone" width="1280"] On August 28, at Jackson Hole, Wyoming, as expected, there were no clear statements about future monetary policy from central bank leaders. Photo of Bank of Japan Governor Kuroda, Fed Chair Yellen, ECB President Draghi taken at Jackson Hole on the 25th (2017 Reuters/Jade Barker)[/caption]

This is last year’s photo.

Casual, no tie, walking and talking.

What draws attention to Jackson Hole isthat at the end of summer, it is the start of the second half of the year’s “star” for the economy.

Because there have been bombshells coming from Jackson Hole in the past.There have been.

This time, BoJ Governor Kuroda will be absent.

Instead, Deputy Governor Wakita is expected to attend.

Powell, Fed Chair, is scheduled to speak on the 24th.

Key topics will include trade, tariffs, and emerging markets.

We expect surprising remarks.

2)ECB Council meeting minutes release

At the previous meeting,QE to end within the year,rates held steady into next year; we will look at more details.

I don’t expect QE to resume, butwhether rate hikes may come sooner?

EU concerns are many,what are the concerns?

We are watching the outlook for the euro.

This week, the euro has been broadly rebounded.

Will the rally continue?

Will another drop begin?

We are watching closely.

EUR/USD daily chart

3)U.S.-China trade balance & additional tariffs

From yesterday, U.S.-China trade talks have resumed.However, at deputy level, no major progress appears likely.

.

Whether U.S.-China relations deteriorate further or set the stage for high-level talks remains to be seen.

Also watch the yuan level.

USD/CNY daily chart

USD/CNY

4)Trump administration remarks & responses

Yesterday, Cohen and Manafort’s testimony coverage

The Trump administration is once again a source of tension.

U.S. media are reporting heavily, so expectations are on how Trump will respond.

Will he take action to quell the fire!?

Or create another target!?

With midterms approaching, investors expect some move.We think so.

5)UK Brexit negotiations

Headlines on Brexit talks have started to appear since yesterday.

Negotiations are ongoing, so we are watching the tone of reports from the UK and the EU for progress.

In the UK,no-deal again,May administration problems,Scotland issues attract attention, creating headlines that move up and down.

GBP/USD daily chart

6)Emerging markets

Ahead of the long holidays (Sacrifice Festival) Turkey is closed,price action seems to have calmed.

Yet, many risks remain, so we are watching closely.

Argentina → Turkey → South Africa → Brazil showing the decline of EM currencies.

Also, news of progress on NAFTA talks has caused the Mexican peso to move significantly.

EM currencies remain volatile; proceed with caution.

USD/MXN minute chart

◎ Current positions and today’s strategy

Long CAD/JPY is being held.

Yesterday’s retail sales were slightly weak, but fully recovered and rose.

Gradually, expectations for autumn rate hikesare emerging.

Rising oil prices also support.

I think there is still room to rise.

CAD/JPY daily chart

CAD/JPY intraday chart

Personally, I see many factors weighing on the euro, so I think this rise is a correction.

The U.S. dollar’s renewal of debt service is on August 15.

About U.S. debt issuance and interest payments

Dollar selling on debt redemption and interest payments is negative for the dollar, which aligns with market sentiment.

However, the current euro rally does not align with my view, so I will stay cautious.

EUR/USD intraday chart

Dollar-Yen appears to be in a range-bound, narrow range; expect consolidation.

With Jackson Hole approaching, moves may be subdued.

”110.50” centered on”110.80” ~ ”110.10” or ”109.80”

USD/JPY daily chart

USD/JPY intraday chart

◎ Today’s key checks

U.S. 10-year yield chart

Japan 10-year yield chart

Germany 10-year yield chart

Italy 10-year yield chart

Note: yields have surpassed 3.0% and are rising again.

Spain 10-year yield chart

Greece 10-year yield chart

Turkey 10-year yield chart

Brazil 10-year yield chart

◎ Yesterday’s key officials’ remarks

President Trump
“I will not tolerate further increases by China at this time”
“Trade talks are taking time but are going very well”
“Impose a 25% tariff on all cars from the European Union”
“If you are looking for good lawyers, Michael Cohen is definitely someone to avoid”

Moody’s
“China’s GDP could slow to 6.6% this year”
“Further deterioration in trade conditions poses risks to growth in the U.S.-China relationship as well as to growth prospects in Asia”

De Bell: Deputy Governor of the RBA
“Inflation expected around 2.25% in the next few years”
“Downward pressure on inflation will eventually ease”
“Current accommodative stance supports employment and inflation”

Wang Yi, Chinese Foreign Minister
“We hope for good results from today’s U.S.-China trade talks”

USTR spokesperson
“Main issues of NAFTA remain unresolved”

Guajardo, Mexican Economy Secretary
“Hope the NAFTA renegotiation concludes as soon as possible”

Seade, Mexico’s NAFTA negotiator
“Negotiations are on track, and we could reach an agreement within hours”

Freeland, Canadian Foreign Minister
“NAFTA renegotiation progress with the U.S. is highly encouraging”

FOMC minutes
“Many members saw merit in a near-term rate hike”
“Risks to growth from trade, housing, and emerging markets”
“Many members expect inflation to stay near 2% in the medium term”
“A few members expect U.S. economic growth to slow in the second half but still exceed potential growth”
“Powell proposed discussing the balance sheet reductions in the fall”
“Discussing the impact of a flattening yield curve”

Sanders, U.S. White House spokesperson
“Trump and Abe spoke by phone”
“Both leaders agreed to continue sanctions on North Korea”
“Regarding Cohen, the President did nothing wrong”
“Manafort’s pardon is not being considered”

Lighthizer, U.S. Trade Representative
“A time is still needed to complete the auto tariff report”