EU summit starts! A day with many notable statements from leaders - Strategy for October 17

◎Current positions and strategies

EUR/USD Short positions are held only as core positions. Although hidden within Brexit negotiations, concerns over the Italian budget plan have not disappeared. However, it seems a bit more optimistic, with moves surrounding “1.1600.” Will the time-frame chart break upward, or will it drop again? This is worth watching. The Fibonacci on the hourly chart (yellow) around 61.8% appears to be supported. I think the key is whether it can break below this level.

EUR/USD Hourly Chart

EUR/USD Daily Chart

AUD/USD Short positions are held.Dollar weakness has prevented much downside, but for AUD there are many negative factors, so I want to monitor. The hourly chart's Fibonacci (green) 61.8% is capping the upside. If it breaks above this, I would be cautious, but basically as long as the price remains within the daily chart’s parallel channel (white), I intend to stay short.

AUD/USD Hourly Chart

AUD/USD Daily Chart

From today there are many big events including EU summit, Asia-Europe Meeting, and APEC finance ministers’ meeting. There will be many statements from dignitaries, so I plan to refrain from aggressive entries. I will collect and analyze materials for next week or later.

◎Today’s Highlights

1)EU Summit Starts

Formal EU summit starts tomorrow, but today a summit excluding the UK will be held. Naturally, the topic is Brexit negotiations. This morning there were remarks about delaying the withdrawal negotiations, but extending requires the consent of all EU member states. Some countries have already expressed opposition, so there will likely be no extension of the withdrawal negotiation deadline. Today’s summit will discuss without the UK and may consolidate European positions, but the focus is on whether an extraordinary summit will be held in November. The talks today and tomorrow are unlikely to settle Brexit negotiations. Therefore, will an extraordinary summit be held in November, or will talks toward a final agreement be held at the December summit? This is what to watch. Also, beware of statements released today excluding the UK.

2)Equities and Long-Term Rates

From last week into this week there was a risk-off mood due to global stock declines, but yesterday’s stock markets rebounded sharply. Global stock prices are rising. Cross-yen and cross-franc are rising markedly. A risk-on mood is in place. However, concerns remain that long-term rates stay high and Gold prices remain elevated. It may take a bit more time for a true risk-on environment. Therefore, keep an eye on stocks and interest rates.

3)European Risk (Italy Budget)

Ideally, the deadline for the Italian budget was the 15th, but has it been submitted? What is Europe’s response? It is not clear yet. Attention currently focuses on Brexit negotiations, but this is also a problem. It is likely to emerge urgently and could become an European risk. Be mindful of statements and announcements regarding Italy’s budget.

4)Dignitary Remarks

Today there are many remarks from leaders of major central banks: the Fed, ECB, and BOE. Of particular interest is Prime Minister May’s remarks, presumably regarding Brexit negotiations. I plan to pay close attention.

5)FOMC Minutes

Although further rate hikes this year seem priced in, I’m watching for economic outlook changes, next year’s rate-hike count, and whether there was unanimous agreement or dissent. The stagnation in USD/JPY may be resolved; I’m watching for a possible trend formation.

◎Today’s Event Schedule

10/17 (Wednesday)

APEC Ministers' Meeting
EU Summit (excluding UK)

16:30　EURPratt, ECB Executive Board Member, remarks
17:30　GBPUK CPI (Consumer Price Index)

18:00　EUR European HICP (Consumer Price Index)
22:15　GBPCarney, BOE Deputy Governor remarks

10/18 (Thursday)

01:00　GBPPrime Minister May remarks
01:10　USDBrainerd, FOMC Member remarks
01:30　EURWeidmann, President of German Bundesbank remarks
02:00　EURBroadbent, BOE Deputy Governor remarks

08:50　JPY Trade Balance
09:30　AUD Employment Change and Unemployment Rate

◎Yesterday’s Recording Room

↓↓↓ For yesterday’s long-term rates, stock prices, and dignitary remarks, see below ↓↓↓

October 16 Recording Room – Rates, Stocks, and Dignitary Remarks

◎Weekly Schedule

↓↓↓ See below for the weekly schedule and highlights ↓↓↓

EU Summit 개최, a wild week for the euro and pound! – Highlights for the week of October 13