Sentiment rattled by Powell

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Daily outlook – 14 May 2020

By: Stuart Cowell

Sentiment rattled by Powell & continuing 2nd wave worries. USD & JPY rallied, GBP, EUR & AUD weaker, Equities and Yields fell, Gold moved up. USOil holds $25, BYTC over 9k. TRUMP rebukes Fauci likes negative rates and adds more pressure to China with exec orders against ZTE & Huawei. AUD jobs bad but not as bad as expected, Bailey, Orr & Kuroda all talked of more easing and German wholesale inflation weak.

USD index – rallied to 100.35 (R1) and holds, Powell was anti negative rates, but gave a pragmatic outlook for recovery “significant downside risk” “Unemployment to peak within a month” but that the downturn was “different and specific” this time. – “Fiscal stimulus can be costly but could be worth it”
EUR – back to test 1.0800 again from 1.0888 highs again yesterday. PP 1.0850, S2 1.0785. Trades at 1.0810 (S1)
JPY declined again from 107.20 yesterday two day low today now at 106.80 (S1) – PP 107.00, S2 106.50
GBP – back down under 1.2200 this morning, out of channel trades at 1.2195. PP 1.2265, R1 1.2300, S1 1.2180
AUD down under 0.6500 again after touching 0.6520 yesterday – trades at 0.6440 (S1). PP 0.6480, S2 0.6405
CAD from 1.4000 lows yesterday rallied to 1.4100. PP 1.4065 R1 1.4112
CHF – holds back over 0.9700 (PP) at R1 0.9725, R2 0.9745
NZD back down under 0.6000 after rallying to 0.6050 yesterday – Orr talked more stimulus and was more accommodating re negative rates. Trades at 0.5980, S1 0.5970 PP 0.6035
BTC – post HALVING breaches 9,000, rallies to 38.2 fib and R2 at 9,400

GOLD – gets safe-haven bid – spiked to 1719 on open. 1715 now. PP raised to 1710, R1 1722. & S1 1704
USOil rallied to test $26.00+ after EIA inventories showed a build of 745k barrels vs .expected drawdown of 4.1 mill. Trades at $25.60 PP. R1 26.35, S1 24.70

UAS500 – down 1.75% (50 pts) on top of Tuesdays 60 pt fall and break of the 20-day MA. Closed at 2820 – FUTS also trade down at 2805 having tested 2800 (S2) earlier. S1 2819, PP 2850, S3 2765

Today – EU Economic outlook, US Weekly Claims (only 2.5 mill?) CAD FSR & Manu Sales and speeches from Bailey, Poloz, and Kashkari.

Biggest (FX) Mover @ (06:00 GMT) AUDJPY (-0.50%) – Rejected 69.70 yesterday, broke 69.00 earlier, fallen to S1 at 68.70. MA’s, Stochastics and RSI all aligned lower. (RSI 38 & Stochs falling) MACD histogram negative, the signal line under 0 from yesterday. H1 ATR 0.1750, Daily ATR 0.8500


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