Weekly Forex Event Previous —June 24th, 2019

Powell Speech

Last week, FOMC meeting, Fed’s change in stance led to a significant decline in the greenback, 8 out of the 17 officials predicted that Fed will cut the rate this year, and the policy statement also canceled the words “be patient”. On the Press, Powell also claimed that Fed will firmly maintain the 2% inflation target, and if necessary, will pass the interest rate cut to support the growth of the economy.

Therefore, it can be predicted that Powell will be dovish on this speech, and emphasize the Fed will cut the rate to keep the inflation at 2% if it is necessary!

US Q1 GDP Annualized (Q1)

Now the Market predicts that the US Q1 GDP Annualized (Q1) is 3.1% .

If the announcement is better than the prediction, or the USD will be strengthened. If the announcement is worse than the prediction, or the USD will be weakened.

US May PCE Price index

This is the inflation indicator the Fed think highly of. It fluctuates between 0–0.2%. According to the US Economic data, the CPI, PPI is not better than expected, and the retail sale is better than the previous value, so the PCE might not so bad.

Now the market predicts that the US May PCE is 0.1%.

If the announcement is better than the prediction, or the USD will be strengthened. If the announcement is worse than the prediction, or the USD will be weakened.

G20 Trade Talk

Investors’ attention is shifting from the world central banks towards the G20 leaders. That way, Trump and Xi Jinping’s meeting to discuss the China-US trade deal has the greatest potential to impact on the markets.

It is hoped by investors that negotiations finally get off the ground.

Oil Markets

The geopolitical escalation in the Middle East is unquestionably a bullish short-term signal for oil markets, as even the thought of 20 % of the world oil supply being affected is enough to trigger significant tremors across oil markets. And these tremors are noticeably moving up the Richter scale as finally there was some noticeable activity for August $70 calls, but frankly, I have no idea why it took so long.

While Iran risk premiums are tentatively holding, life in the oil market is never a one-way street these days as the lack of a significant push higher at the open suggests the market remains focused on OPEC summit, G-20 and of course U.S.-led oversupply concerns which suggest US inventory data will drive the bus this week.

Gold Markets

Falling global yields and unwinding of long USD positioning has made gold attractive to a broader range of investors. And these new waves of buyers continue to support gold prices amidst a growing list of catalysts which continues to suggest Gold demand could continue to swell.

Gold’s broadening appeal is what makes it so attractive me as a not only hedge against the weaker USD on the back of a dovish Fed but also against the recessionary signals that we have talked about endless last week.

But with both Gold trading firmly and equity markets making new highs something must give. With stock indexes making all-time highs, equity markets always remain incredibly vulnerable to a significant downside correction. Given the numerous catalyst that could trigger as stock market decline, Gold in this feverish environment, Gold needs to be your first flipside investment.