Is the European sovereign debt crisis flaring up again!? Attention on Italy's budget proposal ~ Key points and event schedule for September 28 ~

◎ Holdings positions and strategies

Following yesterday's strategy,Italian Budget andEURUSD charts overlapped, so we opened a newShort position. ”1.1620” and"1.1560” are the levels we are watching. The extent of the drop will depend on how much the fiscal deficit GDP ratio of 2.4% is deemed problematic, but we are considering a holding period of about 1–2 weeks.

EURUSD daily chart

EURUSD hourly chart

Yesterday's entry, theUSD/JPY was almost at the profit-taking point, but... ended up with a full retracement and stop-out. As I wrote yesterday, I didn't have much confidence, so I'm glad I kept the stop tight. USD/JPY has broken above the year-to-date high, so for now I think it may attempt to test the 114 level.

USD/JPY hourly chart

USD/JPY daily chart

CAD/JPY long position is held. Negative factors from NAFTA renegotiation affected more than expected, but the fall retraced completely within expectations. I think it will continue to rise. I also think Powell's statements signaling gradual rate hikes will be a tailwind.

CAD/JPY hourly chart

CAD/JPY daily chart

In addition, other currencies to watch are GBP and AUD. GBP has largely recovered from the recent drop. Unless there is a severe negative catalyst, the downside should be limited. Therefore, when positive news for the pound emerges, it may be good to ride the short-term momentum.

AUD is testing lower due to the US-Australia interest rate gap and Chinese stock prices. Watch US rates, and US-China trade tensions, and Chinese stock prices.

◎ Today's points of focus

1) Italy's budget

The 2.4% of GDP fiscal deficit in Italy's budget is seen as problematic. It may not be approved when submitted to the EU. Therefore, for the near term, Italian fiscal issues will attract attention. Personally, I think 2% of GDP is a reasonable compromise, so I will watch closely whether it is revised to within 2%.
※ 2% of GDP is a number I monitor based on settlement decisions, so it differs from EU discipline figures.

2) The course of trade negotiations

US-Japan trade talks seem to have passed smoothly. NAFTA renegotiation is in a state of flux, but attention is on whether an agreement can be reached this weekend. Regarding the US-China tariff war, there are no signs of improvement. Regarding China, a plan for a fourth round of tariffs has been prepared. However, China cannot win a tariff fight with the US. It remains to be seen what measures China will take next. Also, the yuan's weakness is a concern for the US, but for China it is a double-edged sword due to risk of capital outflow.

With the dollar strengthening not only against the yuan, we should watch and be cautious of statements or tweets criticizing currency depreciation policies.

3) UK, Conservative Party Conference

From the weekend, the Conservative Party Conference will be held. Party conferences carry significant influence. Since the ruling party is Conservative, we should watch the leadership of Prime Minister May and the hardliners in Brexit negotiations.

4) Quarter-end, month-end, weekend, and roughly fifty-day factors

Be mindful of time around fixings, references, and markets' open/close times.

◎ Weekend economic calendar

9/28 (Friday)

08:50　JPYBOJ press conference highlights
10:45　CNY　Caixin Manufacturing PMI
15:45　EUR　France HICP
16:00　EUR　Spain HICP
16:00　TRYTrade balance
16:30　SEK　Sweden retail sales
16:55　EUR　Germany unemployment rate
17:30　GBP　UK GDP
18:00　EUR　Italy HICP
18:00　EUR　Eurozone HICP (CPI)
21:30　USD　PCE deflator
21:30　CADCanada GDP
21:30　USD　Barrick and Richmond Fed Presidents' remarks
22:20　GBPLammpsden BOE Deputy Governor's remarks
23:00　USD　University of Michigan Consumer Confidence Index

9/29 (Saturday)

02:00　USD　Baker Hughes Rig Count05:45　USD Williams - New York Fed President's remarks

9/30 (Sunday)

UK, Conservative Party Conference(30th to Oct 3)
New Zealand daylight saving time begins