Brexit negotiation deadline approaching! Be cautious of related statements ~Strategy for October 16~

◎ Currently Held Positions and Strategies

Short positions on EUR/USD are held only in core positions。 The European region is full of negative factors such as Italy’s budget, the Merkel administration, and Brexit negotiations. We are viewing the euro from a selling bias, but EUR/USD is rising due to dollar weakness. What to watch is that it is rebounding at the 61.8% level of the Fibonacci on the time-frame chart (yellow). Is this a pullback for further upside? Or a double top forming and resuming a decline? We are watching which way it will move. I want to pay attention to the dollar’s direction.

EUR/USD Time-frame Chart

EUR/USD Daily Chart

AUD/USD Short position is held。 Attention points are the currency report and China responses, but we expect negative factors to appear rather than positive factors. Therefore, we are considering a strategy to sell AUD, but last weekend the dollar weakened and AUD/USD rose. As above, I want to focus on the dollar’s direction. On the time-frame chart, I’m watching whether it can rebound at the 61.8% level (green). If it seems it will test lower again, I will consider adding positions. Today, the RBA Board Minutes will be released.

AUD/USD Time-frame Chart

AUD/USD Daily Chart

Yesterday, Canada’s BOC sentiment was quite hawkish, leading to a rebound in the Canadian dollar. I want to assess the situation and consider a Canadian dollar-buying strategy. I’m currently considering one of AUD/CAD Long, USD/CAD Short, or CAD/JPY Long.

CAD/JPY Time-frame Chart

CAD/JPY Daily Chart

◎ Key Points for Today

1）Brexit Negotiations and the UK-EU

As the Brexit negotiation deadline approaches, many speculative statements emerge. On the UK side, there are hardliners, Prime Minister May, and differences in Northern Ireland. On the European side, it is no longer feasible to focus only on Brexit negotiations. Until Friday’s EU summit, I want to keep an eye on the headlines.

Ireland Border Issue — The Most Difficult Part of Brexit Negotiations

2）Italy’s Budget

Italy’s budget proposal has a deadline for submission. It’s overshadowed by Brexit-related statements, but I’m watching whether the Italian government will need to revise the budget if it doesn’t pass. Also, ratings are due at the end of the month. I’m watching reports about the budget.

Euro Volatility Around Italy’s Budget — What’s the Problem? Explained

3）Foreign Exchange Reports and Currency Clauses

Japan is on a watchlist in the Foreign Exchange Reports. China’s status as a manipulating country is drawing attention. We are watching the responses of the US and China. Also, a frequently heard concern recently is currency clauses. In the renegotiation of NAFTA, Canada and Mexico are said to have included currency clauses. With ongoing US–Japan trade talks, attention is on whether currency clauses will be established.

◎ Today’s Economic Calendar

10/16 (Tuesday)

09:30 AUDMinutes of the Monetary Policy Meeting (10/2)
10:30 CNY China CPI (Consumer Price Index)
17:30 GBPEmployment Change & Unemployment Rate
18:00 EURItaly HICP (Consumer Price Index)
21:00 HUF Hungary Central Bank Rate Announcement
21:30 USD Industrial Production

◎ Yesterday’s Records

For yesterday’s long-term interest rates, stock prices, and remarks by key figures, see below

October 12 Records — Rates, Stocks, and Key Statements