S&P 500, USD, Gold Price Analysis
- It was a pullback type of morning as trends in all of the USD[1], Gold[2] and the S&P 500[3] have posted counter-trend moves.
- While many appear to be harboring expectations for equities to crash, the S&P 500 remains about 44% off of the March lows; and this morning’s pullback has so far found support at a key area on the chart.
- The x-factor here appears to be the Fed, as Jerome Powell had previously remarked that there’s ‘no limit’ to what the bank can do[4] with the liquidity programs available to them.
New Quarter, New Questions
We’re now just over a week into Q3 and already some items of interest have begun to show around global markets. While headlines remain a mess with heavy politicization of the coronavirus, which can bring a massive impact onto market expectations, the trends across risk markets have remained fairly clear. Stocks have been very strong since the March lows, and given the expectation for the FOMC[5] to remain very loose and passive in the effort of offsetting coronavirus-slowdown risks, Gold prices have driven up to a fresh eight-year-high[6].
Perhaps surprisingly, the USD has shown a general proclivity to range over the past few months[7], with the bulk of Q2 spent in mean reversion and, so far that’s been the name of the game in early Q3 trade. To be sure, there was a quick spurt of trend in late-May and early-June; but after DXY[8] ran into the key support zone running from 95.86-96.05, sellers were thwarted and the currency moved into a range bound state that held through the end of
