Japan, the United States, and Canada pay attention to China on the final day of the three-day weekend, after the long holiday ends! ~Strategy for October 8~

◎Currently Held Positions and Strategies

EUR/USD Short position is held。 Plan is to close half at 1.1550 and to close all at 1.1600. I would like to add a Short position at 1.1460. The point to watch is the fate of Italy’s budget. I expect Italy’s budget proposal to be submitted within this week. If it is a concession to the EU or if there is any announcement indicating the EU will concede, I am considering an immediate settlement.

EUR/USD Timeframe chart

EUR/USD Daily chart

CAD/JPY Long position is held。 Close at 87.10. I am considering adding a position at 89.20. If it breaks upwards, I think targeting 91.50 may be possible.

CAD/JPY Timeframe chart

CAD/JPY Daily chart

AUD/USD Short position is held。 In a pullback, I expect it to return only to around the white circle on the timeframe chart. Since it is approaching the lower bound of a price decline channel on the daily chart, a near-term rebound is a concern. However, considering U.S.-China issues and a strong U.S. economy, another drop is possible. China is a focus.

AUD/USD Timeframe chart

AUD/USD Daily chart

Other focus is on EUR/GBP。 Following the recent pound rally, I expect a pullback (on the timeframe chart white circle), and I am considering a Short position when it retraces. This week is a crucial week for UK and EU. Key figures are likely to speak. If positive statements arise, I expect a reaction with pound buying. However, there is also a possibility of negative statements, so if holding positions, keep stops tight and take profits steadily.

EUR/GBP Timeframe chart

EUR/GBP Daily chart

◎ Today's Focus

1)China's movement after the major holidays

Today marks the end of China’s major holidays. Focus on stock indices and the yuan. In particular, a US currency report is expected to be released this weekend. President Trump has criticized the yuan depreciation. The yuan is currently at a high level against the US dollar (yuan depreciation). It remains to be seen whether it will continue to rise.

USD/CNY

2)Italy Budget

There are various rumors and reports about Italy’s budget. However, Italy will submit its budget to the EU within this week. Headlines and key remarks about the budget should be watched. The current reported Budget Deficit to GDP ratio of 2.4% has begun to be priced in. The main focus is the EU’s stance. If the EU takes a firm stance against the budget, further euro depreciation is possible. Conversely, if there are concessions from Italy and/or the EU, euro buying may respond. Given current euro levels, EUR/USD could move in either direction.

Euro swings on Italy budget! What’s the problem? Explained

3)Brexit Negotiations

The Brexit negotiation deadline is approaching for the October EU summit (the 18th). Key speakers are likely, so stay tuned. Headlines and remarks are likely to have a strong positive reaction if favorable, but negative remarks are expected to be more limited. Especially headlines or remarks regarding the Ireland border issue are under close watch.

Ireland Border Issue – The Most Difficult Brexit Negotiation

4)Thin market

Today, the Tokyo market, US market, and Canadian market are closed. Outside European hours, the markets are likely to be thin. Volatility can occur rapidly, so with Monday after a holiday, a cautious stance and staying on the sidelines may be prudent.

◎ Today’s Event Schedule

A week with a focus on key speeches! – Strategy and events for the week of Oct 8

October 5 Notes Room – Key speeches and long-term rates