Risk-off market surges in! Global stock declines, European crisis anxiety ~October 19 strategy~
◎ Current Positions and Strategies
EUR/USD Short position is held. The next targets are the previous low “1.1430” and then “1.1400.” I am considering adding around the “1.1400” level if broken. Due to growing concerns about the Italian budget, I plan to hold a bit longer.
With the daily chart breaking below the white parallel channel, it seems likely to attempt a new low.
EUR/USD Timeframe Chart
EUR/USD Daily Chart
AUD/USD Short position is held. Although yesterday’s unemployment rate in Australia was strong, the decline in Chinese stocks due to deteriorating U.S.-China relations has caused AUD to fall. I plan to hold until U.S.-China relations improve.
AUD/USD Timeframe Chart
AUD/USD Daily Chart
As for other currencies,Canadian Dollaris in focus. If today’s CPI data shows a strong result, I am considering buying the Canadian dollar. For cross pairs, I am considering CHF, AUD, or EUR.
◎ Today's Highlights
1)Italian Budget
Yesterday at the EU summit there were comments regarding Italy’s fiscal concerns. Italian Prime Minister-designate Mario Draghi did not name Italy specifically but stated, “Maintaining EU fiscal discipline is important.” The European Commission hinted at rejecting the Italian budget. It is unclear whether Italy will revise the budget. The focus is on how both sides will reach an agreement going forward. Italy’s credit rating announcement is due at the end of the month, and there are concerns about a European-wide crisis sparked from Italy.
Explainer: The euro swings wildly over the Italian budget—what’s the issue?
2)U.S.-China Cold War and Chinese Stock Prices
Recently, Vice President Pence criticized China. The U.S.–China relationship is less about trade and tariffs and could be described as a cold war. In response to U.S. criticism, Chinese stocks (Shanghai Composite) have plummeted. There are no signs of improvement in U.S.-China relations; the situation may be prolonged. I will watch China’s economic outlook closely.
3)Saudi Arabia and the U.S.
Concerns are rising around the Saudi journalist case. Globally, calls for sanctions against Saudi Arabia are emerging. The U.S. is defending its ally, but future moves are important to watch. One concern is the price of oil. Analysts have varying forecasts, with some predicting crude at $200 per barrel. I will monitor whether this issue grows further.
4)Brexit Negotiations
At yesterday’s EU summit, there was no clear path established for Brexit negotiations. Deliberations even suggested a potential postponement of the November EU summit. While some proposals call for extending the transition period, the UK side is unlikely to accept such an extension. If this result persists, attention will turn to Prime Minister May’s position. Focus on Brexit talks and UK politics.
◎ Today’s Event Schedule
10/19 (Friday)
EU Summit (in Brussels, 18-19)
Asia-Europe Meeting (in Brussels, 18-19)
11:00 CNY China GDP
15:35 JPY BOJ Governor Kuroda's Speech
21:00 CAD・Retail Sales
22:00 USD Kaplan, Dallas Fed President's Speech
10/20 (Saturday)
01:00 USD
01:10 GBP
↓↓↓ See below for the weekly schedule and highlights ↓↓↓
EU Summit held, euro and pound volatile this week! – Key points for the week of October 13
