ZFX: Powell’s remarks turned the sentiment bearish

Wednesday (May 13) Review

• Fed Chairman Powell said that the economic outlook of US was highly uncertain and subject to significant downside risks. He believed that more stimulus measures are needed to ease the economic downturn from the global pandemic. His pessimistic speech hit the market sentiment. In addition, he pointed out that the Fed was not considering negative interest rates as one of the tools.

• US President Trump said he disagrees with Powell about the negative interest rates. However, he also believes Powell’s performance has improved.

• The Chairman of the International Monetary Fund (IMF) Georgieva said that it is likely to further lower the global economic growth forecast, as the coronavirus outbreak has hit so many countries that even worse than previous expected.

• The tension between China and the United States has now become a key concern, triggering risk aversion. The Federal Retirement Thrift Investment Board (FRTIB) announced that it will postpone its investment in some Chinese companies which including in the MSCI. The market believes that it was a decision under the instruction by Trump. Furthermore, Trump said on Twitter that “dealing with China is a very expensive thing to do” which was clearly not favorable to China-US relation.

• Market sentiment was bearish on Wednesday. The Volatility index (VIX) has jumped for two consecutive days, and the three major Wall Street indexes all dropped. Investors are worried about the risk of the second wave of outbreak, the rising tension between China and the US. Riskier assets may be under pressure before any bullish news upcoming.

ZFX analyst Jacob Leung said that hopes on the negative interest rate were missed, boosting safe haven demand which may further benefit dollar and gold price. This week the focus will be more on the China-US relation due to the lack of stimulus factors.

AUD/USD

Follow-up recommendations: 0.6460 short, target 0.6430, stop loss 0.6480. (Recommendation does not take into account the bid-ask spread factor)

Position follow-up and profit and loss: 0.6490 has been short, and the stop loss is 0.6515 before reaching the target 0.6460. (Stop Loss) (Recommendation does not take into account the bid-ask spread factor)

Cumulative profit and loss: 495 pips

EUR/USD

Follow-up recommendations: 1.0825 short, target 1.0800, stop loss 1.0840. (Recommendation does not take into account the bid-ask spread factor)

Position follow-up and profit and loss: 1.0840 has been short, and the stop loss is 1.0865 before reaching the target 1.0810. (Stop Loss) (Recommendation does not take into account the bid-ask spread factor)

Cumulative profit and loss: 380 pips

GBP/USD

Follow-up recommendations: 1.2230 long, target 1.2260, stop loss 1.2210. (Recommendation does not take into account the bid-ask spread factor)

Position follow-up and profit and loss: 1.2300 short, and the stop loss is 1.2330 before reaching the target 1.2260. (Stop Loss) (Recommendation does not take into account the bid-ask spread factor)

Cumulative profit and loss: 275 pips

GOLD

Follow-up recommendations: 1710 long, target 1717, stop 1703. (Recommendation does not take into account the bid-ask spread factor)

Position follow-up and profit and loss: 1713 has been long, and the stop loss is at 1707. (Stop Loss) 1724 long, with a target of 1730 and a stop of 1717. (Pending) (Recommendation does not take into account the bid-ask spread factor)

Cumulative profit and loss: -$5

USOIL(WTI)

Follow-up recommendations: 26.2 short, target 25.7, stop loss 26.5. (Pay attention to the OTC quotations may have differences) (Recommendation does not take into account the bid-ask spread factor)

Position follow-up and profit and loss: 23.8 short, target 23, stop loss 24.4. (Pending) 26.5 has been short and hit 25.8. (Take profit) (Pay attention to the OTC quotations may have differences) (Recommendation does not take into account the bid-ask spread factor)

Cumulative profit and loss: $10.5

US30(DOW)

Follow-up recommendations: 23000 long, target 23200, stop loss 22850. 23550 short, target 23250, stop loss 23800. (Pay attention to the OTC quotations may have differences) (Recommendation does not take into account the bid-ask spread factor)

Position follow-up and profit and loss: — (Pay attention to the OTC quotations may have differences) (Recommendation does not take into account the bid-ask spread factor)

Cumulative profit and loss: -500 points

Risk Warning: The above content is for reference only and does not represent ZFX’s position. ZFX does not assume any form of loss caused by any trading operations conducted in accordance with this article. Please be firm in your thinking and do the corresponding risk control.