A day of global stock stability and rising long-term interest rates, with attention on speeches from key figures! ~October 9 Strategy~

◎ Current Positions and Strategy

EUR/USD Short position is held。 Yesterday, as before, plan to close half at 1.1550 and close all at 1.1600. I am considering adding a Short position at 1.1460. Be mindful of key speeches; if content appears to concede to the EU or if the EU is making concessions, I am considering immediate settlement. Looking at the intraday chart, it seems to be forming a double bottom. If it rebounds from this level, it will rebound at the lower boundary of the white parallel channel on the daily chart. Conversely, if it breaks lower, I expect a move to probe the downside.

EUR/USD Daily Chart

EUR/USD Intraday Chart

AUD/USD Short position is held。 As with yesterday, since it is near the lower bound of the parallel channel, a sharp drop is not expected; however, given deteriorating US-China relations and a weaker yuan, there is no solid reason to buy AUD. I anticipate a rebound up to the Fibonacci 61.8% level on the intraday chart. If it breaks above that, I would consider closing the position.

AUD/USD Intraday Chart

AUD/USD Daily Chart

CAD/JPY Long position fully closed. Cautious about risk-off flow and declines in cross-yen, so I closed the position for now.

◎ Points of Focus Today

１）Italy vs. EU over the budget bill

Concerns about a European financial crisis are expanding. Yesterday, Italy’s Deputy Prime Minister Salvini said,“Jean-Claude Junker, EU Commission President, and Mario Moscovici, EU Commissioner (Economy/Currency), are the true enemies of Europe.” It appears Italy is not inclined to revise the budget. It also seems to provoke the EU. How will the EU respond? What statements will come out? We are watching closely. If the budget is revised or the EU shows willingness to accommodate Italy, the euro could rebound; if the situation escalates, the euro could weaken further, potentially targeting August lows.

Euro Volatility Around Italian Budget Bill — What’s the Issue?

２）Brexit negotiation-related remarks

As yesterday, be attentive to Brexit-related remarks. Negative statements may not elicit a reaction, but if the border issue in Ireland is resolved or concessions are offered, the pound could react strongly with buying. I will be watching for key statements.

Ireland Border Issue — The Most Difficult Part of Brexit Negotiations

３）Yuan depreciation

China lowered its required reserve ratio. The yuan has weakened significantly. The yuan’s depreciation against the dollar shows no sign of stopping. This weekend, the US currency report is due. If things continue, China may also be placed on the currency manipulation watchlist. Additionally, stock prices have fallen sharply. We will monitor the trajectory of US-China tensions, stock declines, and yuan depreciation.

USD/CNY Daily Chart

４）Rising long-term rates and stock weakness

Italy’s rising long-term yields are affecting Spain and Greece. U.S. long-term yields are rising due to a strong economy. Global rising interest rates increase funding costs, contributing to a global stock decline. I will pay attention to the movements of interest rates and stock prices.

５）Turkey inflation measures announcement

Lira selling has subsided somewhat but has not reversed. The weaker lira has driven inflation higher. There is information that a response to inflation will be announced today. If the content is disappointing, it could trigger renewed lira selling. Caution is advised.

◎ Today’s Economic Event Schedule

10/9 (Tuesday)

Turkey inflation measures announcement planned
Post long weekend for Japan and the U.S.

09:30 AUD NAB Business Confidence
15:00 EUR Germany Trade Balance
16:00 CZK Czech CPI
16:00 HUF Hungary CPI
21:00 USDKaplan, Dallas Fed President speaks
21:15 CAD Housing Starts
22:00 MXN Mexican CPI
22:30 EURBilgoire, France central bank president speaks
23:00 USDEvans, Chicago Fed President speaks
23:35 USDWilliams, New York Fed President speaks
23:35 GBPBroadbent, BoE Deputy Governor speaks

10/10 (Wednesday)

02:00 USDHarker, Philadelphia Fed President speaks
08:30 AUD Westpac Consumer Confidence

For the weekly schedule, please refer to the following

Focus on Policymaker Remarks — Strategy and Events for the Week of October 8

◎ Log Room

We record yesterday’s major currency strength/weakness graphs, stock prices, long-term interest rates, and key remarks.

Record Room for October 8 — Remarks and Long-Term Rates