 Hi, my name is Leon Roe currency trader and trading coach at trading 180 comma welcome to this week's Applied Demand for us and gold Fundamental and technical analysis and let's jump straight into the week ahead. So 19th of June In the United States the spotlight will be on speeches by several Fed officials including chair Jerome Powell's testimony before Congress investors will also closely Follow flash PMI services and manufacturing readings as well as housing data such as housing starts building permits and Existing home sales. It would be a busy week in the United Kingdom with the Bank of England's interest rate decision As well as releases from the inflation rate retail sales and customer confidence Additionally, you've got central banks in China Switzerland The rest we don't necessarily look at And they're detailing the course of their monetary policy elsewhere Inflation rates will be released in Japan So finally flash PMI's for June will offer first look into economic conditions in Australia Japan the UK the euro area Germany and France so lots to look forward to a bit like on the US news, but It's an important They are coming out elsewhere, especially for the UK so moving on to some technicals and Some more in-depth fundamentals. So the dollar this week. What did we see? We saw Jerome Powell indicate that at least two more rate hikes are coming After they actually paused, which is I guess it was considered a skip or pause And it says official lifts officials lift forecast for rates growth Core inflation and Fed signals break from string of increases likely to be brief And so federal reserve officials paused their series of interest rate hikes But projected borrowing costs will go higher so interest rates are going to go higher Then previously expected owing to what chaired Jerome Powell called surprisingly persistent inflation and labor market Strength and so it was considered a hawkish hold But the market actually didn't believe the federal reserve, right? And so you've seen this week, you know from a technical price perspective The dollar actually decrease in value depreciate and this was also driven by some other news that came out Which was inflation related. I think it was was it PPI producer prices index and I think there was Jobs as well or unemployment came in a bit higher in the same week that the federal reserve Were hawkish right and so what that pretty much means is that the data needs to support the narrative So if the economy is slowing and Inflation is coming down to the two percent target Then it means that they're actually less likely to hike And so the Fed can kind of say now that they're hawkish and that they're expecting maybe two more rate hikes But if that doesn't support that narrative then It's pretty much, you know the markets not gonna believe what the Fed is saying, you know today And they're gonna price that in right what they're not gonna price in the hikes, which is basically what what's happened? So To summarize I guess That sentiment and what Bloomberg economists say is that they interpret this dot-plot as as a jaw-boning to when jaw-boning is like that moral suasion so central banks what they do is they try to talk up the Currency so what they'll say is they try to get the market to do the bidding before they actually Do hike or cut and so if they want the market actually and they want prices to go higher or lower And what they'll signal to the market is they'll say oh, we're thinking about hiking And that's basically or use language hawkish language to try to get the market to anticipate that they're gonna hike Pushing prices to where they want prices to you know that may help inflation or deflation Depending whether they want to you know be hawkish or dovish and get the market to move prices and That is what is called jaw-boning without actually moving Or tinkering with interest rates and so they're signaling to the market that they are hawkish But whether they are or not is another you know is another thing. So, you know, basically that's what the Bloomberg economists are thinking is that they are just jaw-boning and talking up The the the dollar and it basically is a way for the Fed to preempt further easing in Financial conditions in response to its rate pause even if the additional tightening is unlikely to be fully delivered And so they say that we believe that inflation will likely be lower than these projections by year-end and Ultimately the Fed will hike less than what the new dot-plot Indicates, right? And this is from Anna Wong-Stewart Paul and Eliza Winger and they are economists now Goldman Sachs have a different View on it Goldman says that markets are too optimistic on the pace of US Inflation drop and strategists watching impact of energy prices and pace of growth and FOMC is still concerned about Persistent price increases inflation in the US won't come down as quickly as markets are currently pricing according to strategists and Goldman Sachs group and so this is really the The the chart and they this is market to be considerably more optimistic than we are about the pace of inflation Normalization so you see the market implied Inflation coming down and then you also see Goldman Sachs is forecast in blue and they think that inflation is likely to You know stay a bit stickier, right? And so Second go back And it said they say although we expect further declines in inflation going forward markets to be considerably more optimistic then we are about the pace of cooling strategies said and It says fun strat Head of research Tom these said that in a note Friday that price increases could ease off potentially this year and possibly amid a Drop in the shelter in the shelter or rent component of the consumer price index of stock market It's beginning to come around to that way of you and probably explain the much of the games the year-to-date is said That wasn't what I wanted to read but Where was it now what did I miss it? All right says here investors could be assumed assuming that a sharp deceleration in growth will lead to a more rapid easing of price pressures Intending to be more bearish on energy prices than what is implied by commodities future strategists led by Praveen wrote on in a note on Friday They've seen they see limited ability for those things to lower prices and say markets also ignoring the potential for delayed Onset inflation in sectors like healthcare anyways the You know Goldman Sachs pretty much believe that Inflation may not you know, maybe stickier than anticipated So it's all about data and when a day it comes out So if data supports a rate hike meaning inflation this remain sticky it doesn't come down as days as it is or goes higher Then in fact that proves that the Fed is right and you'll have You know the they're likely to hike which would then mean that the dollar is likely to be supported but if not then and Inflation is actually seen as coming down Like some economists predict then pretty much any pullbacks are shorting opportunities, right? And so it really just depends on you know how the market See And interpret the data So the dollar was a bit of a bit of a In a bit of no man's land at the moment again, it's just more data dependent. So dollar yen and the The dollar yen again Although the dollar is in a bit of a precarious position and the markets don't necessarily believe their hikes The Bank of Japan is this week stayed very dovish only central bank really to remain dovish and So and not really high crates and so And not looking to high crates in any way to the Bank of Japan holding race possible your curve control adjustment in July But the radar the Bank of Japan governor is still remaining quiet dovish. So with that being said what you've got in fact is more Hawkingness For the dollar and any pullbacks should be buying opportunities if you subscribe to You know the interest rate divergence trade idea so any pullbacks into these zones I think are going to be decent for a for a long trade The problem is though is that the weaker the yen becomes is the more the central bank the Bank of Japan are likely to So want to intervene and so we look at this this article was well talking about the yen carry trade and It says carry trade yen carry traders cheer away the softly softly approach to Bank of Japan So Japanese yen is the only negative yielded among 31 currencies no change to Bank of Japan's negative rate policy expected in 2023 and so This is basically the Where the carry trade is where I shall read it from here It says carry trades take advantage of the difference in interest rates between two economies to borrow Where the rate is low and invest where it is high so while speculation lingers the Bank of Japan made tweak it He'll go control program this summer to make it more sustainable We read his commitment to negative rates is what is key for any carry Strategy involving the yen so they just borrow the end a cheaper rate invest it in you know higher yielding Currencies like the dollar the New Zealand dollar the pound and make money on the difference, right? And so You know with that You know you're seeing and a lot of the yen pairs if it's you know euro yen Pound yen that you're seeing pretty much parabolic moves, right to the upside not so much on the dollar, but on those other Currencies where the central banks are a lot more hawkish you see in lots of upsides So I would in the short term at least expect the hawkishness to continue One four fives are seen as the area where Prices may want to kind of turn around to be fair That's kind of been like the line in the sand From several banks or one four five one four sixes could be a really nice short in area But let's see. I think the path of these resistances still to the upside as and you know as Kind of you know negative sentiment on the dollar Has been against other currencies. I think against the yen It should continue to move higher and then you pull backs are shorting Opportunities pound straight dollar Swiss again dollar big pretty much selling off this week and There are some shorting opportunities Looking for any kind of pullbacks into supply if you want to be a buyer of the Swiss Frank Of course, the Swiss and the Swiss National Bank are looking to hike this week and continue hiking matter effect. So Yeah, they are quite hawkish. So any pullbacks I think are Buying opportunities or shorting opportunities With regards to the Swiss Frank, but again, they are dependency if there's data supporting the economy on further for the dollar as well as Interest rates and inflation then you could see a decent buy in fact at those 88 to 50 cent levels, so so yeah, there's that Dollar cad and the dollar cad again dollars selling off and then when you have a central bank like the Canadian dollar who are Continuing to hike rates or seen as continuing hiking rates and you've got the Federal Reserve who have who have paused Yes, no wonder, you know, you see prices continue falling any pullbacks If you want to be a buyer of the Canadian dollar versus the US dollar, I think that's gonna be a really nice Buy you do have a decent area of demand technically in and around this one three one area But again you to buy that you definitely need some of the prices to kind of move to the upside you need sustainably you'd need the dollar To have some decent Data to support it moving on to the pound dollar And the pound dollar This was a supply zone and I always say this if you've been watching me long enough is that there's no technical level That's gonna stand in the way of Fundamental analysis. This is the reason why We use fundamental analysis to kind of pick and choose levels and directions Right in the direction that you want to trade in at no point You know there's lots of traders that would have tried to get short here and Not understanding why you would want to get short if you know the fundamentals and resentment doesn't support that right? It doesn't support didn't ever supported it. So, you know, you stay out of that trade going short and so you've seen the pound really just go from strength to strength and Pull back to the nearest demand zone is all the way down here. So Yeah, if you if you're just looking at daily demand zones, then you've got a long way to go For a pullback into into this level before looking at long trades, of course There there are options as well that could play out where you have a pullback And then you have prices make new highs and then you'd wait for a pullback into a Higher low or you could have a scenario where you have Prices pull back a little bit then they make lower lows then make a new high breaking that previous high there Then that creates that demand zone around here and then you get that move to the upside there So Many different ways that this could play out doesn't mean that prices have to pull back all the way down to these 26 $1.26 areas You know, you could see that play out as well, but looking at the uk The headline is that britain faces recession and flood of job losses if rates hit six percent investors are betting on rates peaking near two decade higher. So that's actually Supporting the pound at the moment there one of the hawkish central banks and the market is pricing in a lot of well a lot more rate hikes and a lot more than the Than the us anyway and borrowing costs now a bigger drain for households than energy and one of the I guess effects of hiking rates is that it contracts the economy It raises borrowing and lending costs hurts businesses, you know Mortgage repayments and if people have got less money in their pockets because they've got, you know more on their mortgages Then You know, it hurts the economy especially if you know, you're a services more of a services economy and you need retail and sales because you know people are gonna Rather keep the money in their pocket and or can't even afford to you know, spend any out and buy You know things and invest in the as they invest but spend in the economy Because they're paying such high mortgage rates, right? And so that's the downside really to the pound in in over the next maybe couple Maybe medium terms. I wouldn't say even short term, but I would say probably near to mid term You're starting to see this Happened and if you start to see again the data Support the narrative that that the economy is actually contracting then I think the pound has reached its peak and I think the central bank will actually see that as well and start to think You know what we can't raise interest rates as much as you know We maybe thought and so, you know, six percent seems to be the number where There's going to be a you know, quite a lot of pain coming into the economy But I think for now the The The move is to the upside. Of course, don't want to buy at highs waiting for a pullback and then Yeah, into into some sort of zone or let the zone create also as well One of you know, when the bank of england release or I guess Yeah, announced there what what they're hiking and how much they're hiking Take note of the speech afterwards. And if they're hawkish or dovish also as well, there is cpi This week coming out. In fact It should be on here. Let's see what day it is building permits Sorry inflation year on year. So that's on the 21st. So that's going to be a critical critical day for For the bank of england and interest rates and how hawkish or dovish they are and then you've got Bank of interest in bank of bank of england interest rate decision the day after so So, yeah, let's see what happens with the with the pound And also just a reminder that the supply and demand cause content of fundamental analysis mentoring is going to be open tomorrow, I say tomorrow, but on Monday the 19th of June And so if you have been waiting to enroll that is going to be your chance going to be open for a limited time only only for about five days Um, if you want to add fundamental analysis to your trading And learn really high level supply and demand trading strategies as well as stop hunting Just really get um high level mentoring Then you can join then you access to the fundamental analysis spreadsheet where I share my fundamental biases as well as My trading videos and a lot of these trading videos. I don't release to youtube. They are for The members only so Just to let you know to just show you that you've got, you know the 17th of June weekly supply and demand technical analysis So these are technical analysis where I go in depth on The pairs that i'm looking to trade all the trade setups you've got I've got hundreds of videos here also as well you get access to the Wednesday's live call where every Wednesday I have a zoom call where you know, basically Q&A we do Q&A I'll tell you what my biases and why we go over charts And it's your opportunity to really kind of ask questions and get mentoring with me um Where I show you pretty much, um, you know, uh, what to do and how to Really approach the markets and you get um as well, which is access to the trading Mentoring discord channel where we've got a great bunch of traders Check out the youtube mentoring videos where traders give their feedback On the service as well You can check that out on the youtube channels and so yep 19th enrollment opens in In a in a couple of days. So going back to the charts So let's look at the Euro dollar and the euro dollar And um, yeah, so We've had the euro were very hawkish this week we had um ECB hawks worn rate hikes made me to persist beyond the summer So now what's happening is is that the um, they already basically hiked christine legard was very hawkish And then now they're actually pricing in potentially septembers rate hikes Which is which is interesting, but what it does it adds to the um The fact that the european central bank are very Very hawkish even in the face of a recession, which is uh, which is a bit crazy to me But um, the market is basically ignoring the recession Uh talk and pretty much just looking at it from the perspective of who is uh more hawkish And so you've seen that basically in the market Again, no supply zone is going to stand in the way. There's no Uh resistance zone. It's going to stand in the way of uh of the market revaluing Price and this is what we've seen so just update in the the chart And you've got demand zone there as well So any pullbacks to um this area here Is going to be decent if you're looking to buy the euro zoom in out I mean, this is a decent area to actually look for shorts if if if the Excuse me if the um If the data supports actually a hawkish fed so I can't imagine what I can imagine it, uh, but um in the short term Unless, you know, we can kind of break through this supply zone, but really only if There's a situation where Um, the the the data doesn't support the euro. Sorry the dollar Strengthening and so um as the market kind of prices out or doesn't price in To rate hikes then you're going to see prices go to the upside as well as obviously the the european central bank being hawkish But they are also at the kind of the mercy as well of um the economy Or their economy because the ecb faces narrow path to avoid hard landing imf chief says in european central bank should keep focus on reducing inflation which is which is their Their main focus and georgeva Says 90 percent of advanced economies are slowing down because again as I said before The more you hike is the more um, you tend to contract the economy and if you're already in a recession A technical recession and you're hiking then you could actually make things worse. So and you're likely to make things worse and so um It is a bit of a strange one. Um from an an economics perspective, uh, why the european central bank would continue to hike I mean, I understand you're trying to get inflation down and that's the priority but I think um by the end of the year in fact if um The those rate hikes have a detrimental effect the economy In fact, I don't know whether our prices will go. We know there are targets for, you know, the one 12 one 15s Um, I'm not too sure whether that will happen, but let's see Um for now though in the short term You know the sentiment is to buy the euro the market is pretty much saying buy euro buy euro buy euro So any pullbacks are going to be decent buying opportunities if you get down to the 108 Not too sure whether that will happen again similar to the pound dollar where you might get a higher high higher low and then a pullback That would be a buy or you might get lower highs lower lows and then a break and then a pullback And then you're looking for a buy trade there if you're looking to buy the dollar and be um Uh counter to the uh to pretty much general sentiment Then you're looking at um this supply zone here is a decent area to look for Any short trades looking at the euro dollar again, sorry euro yen and again you can see the the difference between central bank divergence playing out on a chart where the european central bank are very hawkish yet the um The bank of japan are not to write and so you'll see in that play out You need them pretty much a 500 600 pip Pullback in order for you to get long on this From a daily demand zone perspective So doesn't that that's going to happen anytime soon unless there's some major news that comes out from japan Um But yeah, where we are again very similar to the in fact exactly the same as the pound dollar or maybe like the euro dollar where you need to see higher highs being made um or pullback Down into the lows or you're looking at lower highs lower lows being made a break above and then a pullback into that demand zone Before looking at getting Long other than that I can't see reason why you would want to get short on that. Um on that yen Unless you're trying to anticipate yield curve control a bit early, but that's going to be a very tricky trade to be fair For you to get involved in Euro pound euro pounds going lower and lower and um, I think with the euro pound it is I think the pound is is Slightly stronger than the I say slightly but it's seen as being stronger than the Um than the euro and really for the main reason for that is I think it's because the pound has um It's got better economy pretty much. They're not in a recession. And so although the the the ECB are hawkish You've got better economy in the uk at the moment but also as well, um the higher they got higher inflation and so um, I think the The the the banks are quite um a pricing in a bit more hikes than expected From the bank of england. So that's basically what's happening. So if you continue to want to be, uh, Short on the euro pound Then you're looking at I think the 108 Uh, sorry the 0.86 twos are going to be really nice for a short or Basically back up into these 0.87 area again that all depends on what happens This week if inflation comes out Higher than expected then pretty much the central bank are going to end up hiking more Or they expect to hike more which then means that you're going to see or you should see The british pound actually start to Appreciate against the euro not necessarily, you know massive increases because you do have Two central banks that are hiking right and when you get two central banks that are hiking Prices do tend to auction But um, you can just get more of a slower grind lower or higher depending on which one the market prefers to buy or sell If you are looking to buy the euro, then you're really looking at next demand zone It's going to be all the way down into the 84 50s before looking at getting long The australian dollar us dollar gone from strength to strength Again, I think last week we're looking for a bit of a pullback If you were looking to buy the australian dollar didn't happen and prices have basically broken through that supply zone And the more times the level is touched by the way, which has been touched like once twice three times The weaker it becomes because it's no longer really a bargain anymore and um So with with a weaker sentiment Against the the u.s. Dollar, but also as well um the um The australian dollar the rba central bank of australia were quite uh hawkish as well They had a surprise hike um was it last week and so pretty much What you're seeing is the effect of again two central banks at least in a short time Um You know diverge where one central bank has kind of held rates And the other and and the market doesn't believe that they all hike as much as they say they are Whereas you've got the rba who are hiking rates and the market believes that they're going to hike rates more, right? So that's the reason why you're seeing this move. So um any pullbacks into demand decent for a uh a buy trade um again very similar to um the other pairs that i've mentioned with regards to the uh the fact that if you don't get You know when you get this large pullback you may have to wait for higher highs higher lows or um, you know certain You know similar patterns also as well If you believe that the uh dollar actually could be a decent buy up here technically But again the data would have to support that narrative If you can't just you know look to buy the uh or or short this pair up about um Anticipating that there's going to be some good news or some decent news for the uh for the us dollar Although this move has gone quite parabolic. So I would expect some profit taking at least to some of these levels before prices go to downside I think also as well Jerome Powell's um Speech could actually be a turning point um around here depending on how hawkish He is and gold finally gold um gold has been in this auction for a while now Let me just get rid of some of this analysis or saying this last week um And there was a really nice stop hunt. I think one of the guys got involved in this um was a really nice trade In fact, let me see if I can find it one second Yeah, so here it was So uh, you know Spencer got a little stop hunt on gold. So yeah, really nice trade So this is where he got involved and uh price has um gone higher It looks like so. Yeah, really nice. I don't know what time frame that was but like maybe a lower time frame Somewhere like maybe the hourly or something. Yeah, so nice nice nice managed to get involved and then prices went to the upside anyways, um Yeah, where we are now, of course, you know, we're at the bottom of this demand zone So prices kind of bounced along if you're expecting The dollar to actually go um to get weaker then you would have to look for gold to go higher if you're expecting the dollar to um get stronger and appreciate then in fact This supply zone could be a really nice supply zone to look for shorting of gold. Um any recession talk Is going to be uh buying opportunities for gold. I think um if the economy starts to contract Further and the signs of slowing down and inflation coming down and the federal reserve is is not looking to hike then gold should be You know the buy as it typically Moves in the opposite direction to the dollar. So uh, those are really where your levels are um at the moment and so yeah, um It's a uh a decent uh trade uh on that on that stop hunt anyways guys, I hope you had um A great trading week and I hope you have a great trading week and don't forget that if you do want to be mentored by myself uh the um trading 180 mentoring opens on Monday the 19th I look forward to working with you anyone who sent me uh also as well any emails if I haven't got back to you I'm I apologize. I don't know what's happened. I think I've had some uh some issues with my uh email coming through from My website and so some people have emailed me multiple times And it hasn't come through and so um and then they email me directly and then it's like oh, I haven't received it So if I haven't received it, I apologize. I'm going to go through them again and try and find exactly where they are And get back to you ASAP. So guys, I hope you have a great trading week I look forward to working with you if you do want to join the mentoring group It's only open for about five days and then that's it for maybe until maybe october november depends Anyways guys, take care speak to you soon all the best