Highlights and Outlook for August 28, 2018!

◎ Today's Featured Events

8/28 (Tuesday)

15:45 EUR France Consumer Confidence Index
16:30 SEK Sweden Retail Sales
20:00 EUR Speaks: ECB Executive Board Member Praet
23:00 USD Consumer Confidence

8/29 (Wednesday)

02:00 USD 5-Year Bond Auction

◎ Today's Key Points

Focus on other factors beyond today's economic indicators.

1) Japan-U.S. stock prices
U.S. stocks rose sharply yesterday. How far can Japanese stocks rise!? Also, with the dollar weakening, how far will the yen weaken? (Can the yen hold?) Attention. For dollar weakness, see below.

Currency weakness policy? Dollar-down trend starting?!

2) UK market reopening after holiday and euro strength
Yesterday, the UK and London markets were closed. European markets rose on strong German data. The euro also rose significantly. Today, London markets reopen. How will euro strength and European stock strength be received? Attention. See below for euro rise.

Euro rising: Is this the start of a continued uptrend?

3) NAFTA renegotiation among Canada, Mexico, and the United States
Yesterday, an agreement was announced between Mexico and the United States. Personally, there are nuances. The announcement came from the U.S. side (President Trump) saying it is bilateral talks, not NAFTA. Mexico may regard it as a trilateral deal with Canada and NAFTA negotiations. Canada is expected to negotiate with the U.S. today. See below for Canada.

NAFTA renegotiation nearing completion! Canadian dollar rise and outlook

4) Others
Turkey entered a large holiday (Eid) and the lira plummeted. Although half of the loss has recovered, there remains a high likelihood of further falls. Caution as turkish moves affect euro, risk-off, and yen/franc. Monitoring Turkey.

USD/TRY 5-minute chart

Additionally, reports suggest the Australian new government is facing a drop in ruling party support. Be cautious of AUD declines due to political issues.

With deteriorating U.S.-China relations, tariff issues are in focus. Both countries imposed tariffs on $16 billion. The U.S. is considering additional tariffs on $200 billion in early September. China may file a WTO complaint as relations worsen. Watch headlines and the yuan level.

USD/CNY daily chart

◎ Positions Held and Strategy

EUR/USD short position was closed due to concerns about dollar weakness. However, as noted above, the short view on EUR remains. I intend to re-enter short when euro risk factors rise again.

CAD/JPY long position added yesterday due to NAFTA news. If an agreement with Canada materializes today, I will add another position. If hawkish comments or rate hike probabilities rise, I will add yet another position.

In the short-to-medium term, EUR/JPY long could be interesting, but I will stay on the sidelines as it diverges from my market view.

◎ Yesterday's Trading Room

Long-term government bond yields by country

US 10-Year Treasury Yield Chart

Japan 10-Year Government Bond Yield Chart

Germany 10-Year Bond Yield Chart

Italy 10-Year Bond Yield Chart

Spain 10-Year Bond Yield Chart

Greece 10-Year Bond Yield Chart

Turkey 10-Year Bond Yield Chart

South Africa 10-Year Bond Yield Chart

Brazil 10-Year Bond Yield Chart

Canada 10-Year Bond Yield Chart

Yesterday's Key Officials' Speeches

Giuseppe Conte, Prime Minister of Italy
“Italy cannot keep the European Union's fiscal rules”

Poloz, Bank of Canada Governor (Jackson Hole Conference)
“To respond to future inflation risk, gradual, data-driven monetary policy is effective”“Price rises are due to temporary factors”
Shinzo Abe, Chief Cabinet Secretary

“Japan's mobile charges are twice as high as OECD average and higher than other countries”

Le Maire, French Minister of Economy and Finance
“Trade wars are avoidable, but uncertainty remains”
“France's 2018 growth rate is projected at 1.7%”
“2019 growth is expected to be sustainable”

Donald Trump, U.S. President
“After a trade agreement with Mexico, NAFTA will be renamed”
“Canada has not yet begun. Start with Mexico first”

Canadian Authorities
“Freeland will head to Washington on the 28th for NAFTA negotiations”

Justin Trudeau, Canadian Prime Minister
“Spoke with President Trump today about NAFTA negotiations via phone. The talks were constructive and progress is welcome”“Hope NAFTA negotiations succeed”
“Hope NAFTA negotiations succeed”