Notable events and outlook for August 27!

◎ Today's Economic Indicator Schedule

8/27 (Monday)

London market closed

22:00 MXN Mexico Trade Balance

8/28 (Tuesday)

02:00 USD 2-year Bond Auction

◎ Today's Highlights

1)Incorporation of Jackson Hole Symposium

At the end of last week in Jackson Hole, Powell's remarks drew attention.

Content:The U.S. economy is strong, but inflation is cooling,.

Hints at an end to rate hikes were also present..

Today, to digest this content,Dollar/Yen and Euro/Dollar are likely to be central focus.

EUR/USD Daily Chart

EUR/USD Hourly Chart

USD/JPY Daily Chart

USD/JPY Hourly Chart

2)Trade/Tariff related

Both sides have imposed tariffs worth about $16 billion.。

The United States is considering further tariffs on China.

China and Europe, among others, have sued the U.S. over tariff policies at the WTO.

Tariff-related remarks are expected again this week.

We should watch for statements and headlines.

3)U.S.-China and U.S.-North Korea relations deterioration

Trump posted on Twitter that Pompeo's North Korea visit plan has been canceled..

He cited delays in North Korea's denuclearization as the reason.

However, behind this,deteriorating relations with Chinamay also be involved.

Be cautious that the U.S.-North Korea issue does not escalate into inflammatory rhetoric or military action.

The U.S.-China issue involves not only tariffs, but also the movement of the yuan, which warrants attention..

USD/CNY

4)Australian new government

Last week in Australia was a week of political upheaval and regime change.

This week,Morrison's new government is being formed.

We will watch whether the new government gains support and maintains stability.

AUD/USD Daily Chart

AUD/USD Hourly Chart

5)Turkish Lira and Emerging Market Currencies

Emerging markets (Argentina, Turkey, South Africa, Brazil) have fallen sharply against the dollar.

Turkey after a major holiday (Sacrifice Festival) ends, watching for reactions..

Turkish lira has recovered to around the 6.00 level.

However, concerns remain.

A renewed decline is something to watch..

USD/TRY Daily Chart

6)End-of-month factors

This week is an end-of-month week.

Real demand movements,reference rates, FIX, and market opens/closes are in focus.

Also, this month on August 15, US government debt maturities and coupon payments occur.

About US debt maturities and coupon payments

◎ Positions Held and Today's Strategy

Current positions are CAD/JPY Long and EUR/USD Short.

CAD/JPY LongRising rate hike probability,stability in crude oil prices,NAFTA renegotiation outlook, etc. provide several positives, so I plan to hold.

CAD/JPY Daily Chart

CAD/JPY Hourly Chart

As for the euro,Italy’s fiscal issues・Turkey issues・Brexit negotiations・Greece and Spain political issuespose many negatives.

However, if the paired currency against the dollar weakens further, I may consider rebalancing currency pairs.

TodayLondon market is closed,summer lull and quiet marketsraise concerns about directional bias.

Since it’s the start of the week and no extraordinary factors emerge suddenly, I will stay on the sidelines.

◎ Key Checks

U.S. 10-year Treasury 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

Brazil 10-year yield chart

South Africa 10-year yield chart

◎ Weekend Remarks by Key Figures

U.S. White House
“U.S.-China trade talks concluded”
“Trade talks include China’s structural issues”
“The U.S. and China discuss how to achieve fair trade”

Reserve Bank of New Zealand (RBNZ) Governor
“Rate cuts are not ruled out”
“NZD movements are very satisfactory”

Ministry of Commerce of China
“China and the United States are in close contact for the next steps”
“Both countries conducted constructive and frank discussions on trade issues”

Treasury
“Fiscal dialogue between the U.S. and China will be held on the 31st”

SARB Deputy Governor
“Take a cautious approach to interest rates”
“South African rand volatility is driven by external factors”
“If currency weakness persists, we will respond”

Moody’s
“Australian Prime Minister’s change will not affect ratings”

Liu Kun, Chinese Finance Minister

“To support unemployed and workers affected by trade frictions, fiscal spending will be expanded”

Lael Brainard, President of the Federal Reserve Bank of St. Louis

“There is no need for the Fed to worry about the yield curve”
“U.S. economy in 2018 is solid, but growth may slow in 2019 and 2020”
“If the economy accelerates, we will respond with policy adjustments”
“Inflation pressures are not that evident”
“Markets are more dovish than the Fed”
“The Fed should not prioritize legal constraints from Congress”

Neel Kashkari, President of the Federal Reserve Bank of Minneapolis
“Raise this year's growth forecast to around 3.00%”
“The Fed's current policy stance has been correct”
“At this point, judging whether to raise the Fed funds rate above the neutral level near 3.0% is difficult”

Robert Kaplan, President of the Dallas Fed
“The Fed should move rates to the neutral level”

Jerome Powell, Chair of the U.S. Federal Reserve
“There is sufficient basis to believe that strong growth will continue”
“Overheating risks are not increasing”
“If growth remains solid, gradual rate hikes are appropriate”
“There are no signs inflation will run meaningfully above 2%”

Guajardo, Mexican Economy Minister
“The U.S. and Mexico, NAFTA renegotiations are proceeding smoothly”

Trump, U.S. President
“At this time, Pompeo will not visit North Korea”
“North Korea’s denuclearization is incomplete”

Conte, Italian Prime Minister
“Italy cannot comply with the EU’s fiscal rules”

Poloz, Bank of Canada Governor (Jackson Hole)