Rise of the Pound and Canadian Dollar, Decline of the Australian Dollar! ~ Highlights and Outlook for August 30, 2018 ~

◎ Today's Featured Events

8/30 (Thursday)

Turkey Holiday (Victory Day)

10:30　AUD　Building Permits
15:00　NOK　Norway Retail Sales
16:00　EURSpain CPI (Consumer Price Index)
16:55　EUR　Germany Unemployment
18:00　EUR Consumer Confidence
21:00　EURGermany CPI (Consumer Price Index)
21:30　USDPCE Deflator
21:30　CADCanada GDP

8/31 (Friday)

08:01　GBP　Consumer Confidence Index
10:00　CNY　China Manufacturing PMI

◎ Today's Key Points and Outlook

1)Will yesterday's pound rally continue?
In New York time yesterdaythe pound surged!Triggered by officials' remarks,the pound/yen rose nearly 200 pipsand has continued to rise for nearly half a day,in what looked like a trend reversal. Still, jumping in now feels risky. I will watch today’s pound movement and officials’ statements. Background on the pound rise is summarized below. Please refer.

Pound Soars!! Analysis of Barnier Brexit Negotiator’s Remarks and Pound Rise

2)Australian Dollar Decline
AUD fell to its lowest in about a year and a half against the dollar. Yesterday too,AUD briefly tumbled. Moreover,the backdrop is a rate hike by major banks on mortgages. In Japan’s terms, imagine Mitsubishi UFJ, Sumitomo, Mizuho, JA, etc.! Not due to a central bank rate hike, yet AUD declined. Also, US-China issues keep AUD in focus. Details on banks’ rate hikes and governance issues are summarized below. Please refer.

Background to Continued AUD Decline! Governance Issues and Mortgage Loans

3)Canada GDP and NAFTA Renegotiation
Although overshadowed by the pound rally,the Canadian dollar continues to rise steadily. Yesterday as well,positive remarks about NAFTA renegotiationwere heard frequently.There were comments that an agreement could be reached on the 31st. The Canadian dollar seems to have broken upward from a triangle against the yen. Today’s release of GDP will greatly influence rate hike decisions.If GDP yields good results, another rate hike could be approaching. If a further rate hike occurs, there may still be upside room. See below for Canada dollar’s rise and NAFTA references.

Canada Dollar Rising! CAD/JPY Breaks Upper Triangle?

4)Turkish Lira Decline
Lately,emerging market currencies including Turkey have been in focus! Yesterday continued decline, USD/JPY around 17. The pace suggests it may break into the 16 range today.16 range... 15 range...If declines continue, it could affect Europe and other countries. Particularly and,EU refugee issues, including Germany, may be affected. We cannot take our eyes off Turkey today. Articles on Turkey are linked below.

Europe Risks Reignite? Safe-Haven Swiss Franc Rises!

Turkish Lira Plunge! Turkey Shock of August 10, 2018 Summary

Continued Turkey Shock Summary. Turkey issues cannot be resolved by Turkey alone!

5)Euro Strength and Turning Point
EUR/USD dropped sharply and then reversed, rising rapidly.It is stuck around the resistance line that it cannot seem to突破”1.1750”. Will it break above this line? Also watching for breakouts, declines, or range. The euro is summarized below.

Background to EUR Rise and What Lies Ahead for the Euro

EUR Rise: Will this trend continue?

6)
Today is the 30th,be mindful of end of month and 50-day factors. Exchange fixes・・. Also,, often occurring.

◎ Positions and Strategies

Long CAD/JPY to be added and held.

Long GBP/JPYto be considered. If supporting remarks materialize, I’d like to enter. However,start small with tight stops.

Short AUDto consider.Pairs with USDmight be preferable,though recent dollar weakness is concerning.

◎ Yesterday’s Record Room

Major 8 currencies strength chart on the 29th

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

UK 10-year yield chart

France 10-year yield chart

Turkey 10-year yield chart

South Africa 10-year yield chart

Brazil 10-year yield chart

Canada 10-year yield chart

Yesterday’s Official Remarks

Foreign Minister Freeland of Canada
“Constructive discussions with USTR representative Lighthizer”
“Mexico’s concessions on labor and automobile origin rules are a good thing”
“We had good discussions with Lighthizer”
“Canada had good discussions with Mexico as well”

Suzuki Hitoshi, BOJ Policy Board member
“With ultra-expansionary financial conditions and government spending supporting growth, growth continues above potential”
“If deflation moves, it is desirable to have room to respond with monetary easing”
“Like any good medicine, monetary policy has side effects; we should carefully assess how and where it affects”
“From the trend of 10-year government bond yields in major countries, this is within an acceptable range”
“Depending on market conditions, the amount of ETF purchases may vary up and down”
“(To mitigate side effects) for example, raising interest rates could be used”
“Side effects may become evident when they accumulate”
“Wider trading ranges are not a measure to raise interest rates”

Barnier, EU Chief Negotiator
“The EU is considering issuing a statement in November about future relations with the UK”
“We are prepared to offer the UK a partnership different from others”

Prime Minister Justin Trudeau
“It is possible to reach a deal on NAFTA renegotiation by the December 31 deadline President Trump is targeting”

President Donald Trump
“Canada will join a U.S.-Mexico trade agreement”