Trading Plan – Monday 22nd June 2020: How the Fed will move equities and GOLD

Mark NugentJune 2020, Trading Plan

Trading Plan – Monday 22nd June 2020: How the Fed will move equities and GOLD

Last Week

Events and Calendar
The US Fed boosted markets on Tuesday by deciding to buy corporate bonds. Further, Fed Chair Powell said that they were “some years away from halting asset purchases”. Trump announced a USD 1 tln infrastructure package was in development.
The Bank of England increased QE by GBP100 bln to GBP745 bln.
Covid concerns continued with the WHO saying there was a high risk of the Beijing cluster spreading.
Other concerns included strife between North and South Korea, clashes between India and China and Trump finally signing the Uigher Human Rights legislation which will impact China.

Risk Sentiment
Risk sentiment was positive on Monday and Tuesday largely due to the Fed’s corporate bond purchasing programme. Wednesday was indecisive and then the remainder of the week was risk-off and reality reared its ugly head.

Asset Classes
Global equity indices were up on the week with the major move being on Monday and Tuesday before partially reversing as sentiment turned sour.
Spot WTI rose to resistance just under USD40/bbl.
GOLD barely moved over the week and is stuck at resistance at USD1745/oz.
The JPY reflected the sentiment perfectly on the daily chart and was up on the week. However, looking at all the JPY charts on the weekly, the greatest mover was GBPJPY and that failed to move much more than 1 times the daily ATR – i.e. difficult to trade.

T36, GBPJPY long, breakeven.

This Week
The week gets off to a bumpy start with the WHO reporting the largest single-day increase in global infections, US cases rising above the recent running averages and a frankly difficult to believe (and maybe missing some context) German “R” value of 2.88.

The calendar is light but of course there will always be the dreaded “events” outside of the schedule.

I go into some detail on how the US Fed’s actions may move equity and GOLD prices.

Happy trading.

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