 Hi, my name is Leon Roe, currency trader and trading coach at Trading180.com and welcome to this week's supply and demand for us in gold, fundamental and technical analysis. I wish you all a very happy 2023 and I hope you had a good 2022 and for 2023 hopefully my videos will help you to turn a corner if you haven't already with your trading and if you are doing well due to watching these videos, long may it continue. So let's get into the week ahead and the trading economics is the one of my go-to sites and if you're looking for you know the analysis as far as the week ahead typically they release it on a Sunday and what I recently on a Saturday 28 hours ago I'm recording this on Sunday and so just click on the week ahead and it will take you to here and zooming in looking at the week ahead it says in the US center stage will be taken by the inflation rate report, Fed chair Powell speech at the Rixpanc International Symposium and the University of Michigan's consumer sentiment also CPI data will be released for China, India, Mexico and Brazil. Finally investors will pay would pay attention to foreign trade for China, Australia, Euro area and the UK and November GDP growth figures for the UK and the monetary policy meeting in the South Korea so a few things going on in the week ahead upcoming to be aware of the most in I think the most eyeballs are going to be on really the CPI and we'll get into that as we as we go on to the charts anyways starting on the charts DXY which is the dollar index measure of dollar strength against various currencies and starting off 2023 so we've got some demand here and let's look to probably just draw some demand all the way down here right so down into this demand zone we've touched this level once twice already technically when you get a level that's been touched several times it no longer really becomes a bargain and it could look for you know a next move down I'm actually still bullish on the dollar for at least the next quarter as are several banks but before I get into that the Fed got some decent news Fed gets Goldilocks in jobs report slower wage growth since solid hiring unemployment rate at 3.5% cooling wage growth in December jobs report seems like Goldilocks print Bloomberg economists says so hopes that the Federal Reserve contain inflation without zooming in widespread widespread job losses mounted Friday after a government report showed robust hiring and a historically low unemployment rate paired with a cooling in wage growth which is actually you know what the Fed actually want so in some respects to December jobs report offered the best case scenario for the Fed Americans keeping their jobs but inflationary pressures of easing of earnings sorry are easing giving policymakers room to slow the pace of interest rate hikes most economists anticipate feds aggressive tightening to push the economy into recession in the next year and for unemployment to rise to some degree by the way there is a correlation between in unemployment and inflation and in fact when inflation I can't remember what the study was called but basically there was a study that showed historically doesn't work you know it's not all the time coordinated 100% but unemployment tends to be correlated with inflation meaning that they work inversely and when in unemployment goes up inflation goes down and as in unemployment goes down inflation goes up so as in unemployment actually rises or when it does start to rise in fact that should help inflation to come down last month's trends if sustained for several months mitigate the chances or yeah chances of an economic downturn at least for now and that makes all the sense in the world if inflation is coming down it's not that the Fed wants fewer jobs what they want is lower wage growth yeah so lower wage growth meaning they want lower inflation more because they're worried about persistent inflation of course Randall Crosner a former Fed governor and now an economist professor at the University of Chicago Booth School of Business said on Bloomberg and you can start to see that the Fed officials raised interest rates by 50 basis points December bringing them to the highest levels since 2007 they moderated their pace after four straight 75 basis point moves but signaled they are not only they not only expect to keep hiking in 2023 but also keep rates elevated for some time and again that's more dependent upon CPI right and so CPI will help determine the size of the next great hike and this is the eco week ahead to consumer prices they are due in week of global inflation releases and I really you know highly recommend that you guys do check out my YouTube channel I do have a couple of webinars matter of fact if you go to the to the YouTube site webinar right if you type in if you if you watch these two webinars fundamental analysis webinar three steps to generate a profit or trade ideas and how to forecast huge trends using forex fundamental analysis you will really kind of understand the fundamentals and the relationship as to how inflation interest rates and GDP you know work and then once you understand that reading these articles becomes you know a lot easier and it makes a lot more sense right anyways inflation data in the coming week are expected to stay consistent with gradual step down in cost pressures and will help determine the size of the federal reserves next interest rate increase so the consumer price indexing excludes excluding food and energy known as core CPI right so the CPI and his core CPI core CPI excludes food and energy and seen as better underlying indicator then the headline measure is projected to have risen 0.3% in December and central banks typically tend to keep an eye more on the core CPI then the headline figure but while slightly more than November the monthly advance would be in line with the average for the quarter and well below the 0.5% average seen from January through September amid the highest inflation in a generation so expected to come in at 0.3 if it comes in a bit higher then pretty much the Fed will be on track to to you know hike by 50 basis points if it comes in you know lower then it will put pretty all cards off the table in terms of the Fed hiking by 50 basis points they're pretty gonna buy 25 basis points which means actually in fact the dollar in the short term going going lower because that has to be priced in to the market right so we take our you know guidance from fundamental analysis and value because ultimately that's what fundamental analysis is determining you know exchange rate value and so nobody knows where it's gonna go right but you know you have a game plan for where you know if data does come out and you understand how exchange rates are valued and the currency is valued then you can say all right then well if it comes out really no lower than expected way though then expected then probably dollar is likely to sell off but I do think that the dollar is still a buy even at the 102s one of the things that does help the dollar to be a buy is seasonality not something I typically look into a lot or you know when it comes to currencies are more again driven by you know what's going on from the fundamental perspective but to add some confluence if you're looking back right at the euro dollar performance since the euro launched in 1999 in the first eight weeks of the year the dollar typically strengthened so this is the euro dollar chart you know euro dollar going down means the dollar is strengthening we did see the last five weeks of the year the euro actually gain and appreciate right we saw that in fact we saw that probably last five weeks maybe must have been the last maybe maybe eight weeks maybe about two months into maybe from November December you know we had a seasonality you know come true so from a seasonality perspective you know if your long dollars then you've got at least some statistics on your side is this the year that it breaks that you know that that usual pattern it could be right again nobody knows 100% but from a Fed you know hiking rates and thinking that the inflation is still you know a bit persistent you know they're looking to hike then I do think 50 basis points and the patient comes out a bit higher than expected core inflation and I do think that the dollar is a buy so again you know it just depends on which way it goes nobody knows for sure that's why you manage your risk and see where you know prices go and and see where the data takes us anyways but my my bias is still to buy dollars and so I'm looking at any pullbacks into the 103s 102 areas as potential buying opportunities moving on to the dollar yen and the dollar yen I'm actually a buyer of the yen looking for an opportunity to get short on this yen as the yen I mentioned it last year pretty the last year's video last one I did was the yield curve control they changed their yield curve control or adjusted it which basically means that the market is thinking that there's a potential for the central bank policy change and so what you're likely to see is in fact you know lower dollar and more of an expensive yen now again I'm not saying that's gonna happen this week it could pull back and the better the pullback the better the price to get in for a short am I buying the dollar against it sorry buying the yen against the dollar no not really I'm buying really the yen against you know my one of my top trades for the year is gonna be the yen against the pound and so I do actually again going back to my YouTube channel for anyone who is you know interested if you scroll down on the main page actually have this video or two videos here which talk about will you know the bank of Japan calls a thousand pit move on the yen and also our bank shorting the pound in 2023 and if you watch these two you'll understand why I'm you know bearish on the pound and bullish on the yen from a fundamental analysis perspective and so I do drop some gems in here this is usually reserved for the for the private members group but I thought I'd release some of these trade ideas to the public and this video's only got 110 views crazy and for over five days just to show you sometimes that you know great information people would rather get blinded by just the technical analysis side of things when really it's the fundamentals that that will drive you know the technicals anyways getting back to the technicals here and so for me if I am not necessarily trading this currency pair but if I was really your options are going to be looking for supply zones sorry not that one supply zones as a pullback into this area to look for short trades if you are looking for long dollar again if I'm buying the dollar wouldn't buy against Japanese yen I want to delete this one here because it touched the zone before beneath it and and so the next really drop down to buy the dollar if you haven't already is going to be down at the one two sevens in fact there are forecasts for the for the dolly yen to actually reach 120s hence the title for the for the YouTube video right will the Bank of Japan calls a thousand-pick move because if that is correct yeah that is correct and we're at what one the one three twos at the moment yeah then you're going to have over a thousand-pick move to the downside right so not necessarily a clickbaity title this is actually you know looking actually at what potentially could happen so with that being said any pullbacks I think are decent buying opportunities for the yen and if the inflation comes out you know stronger than expected then there is a buying opportunity prices do come down to the 130 round number moving on to dollars Swiss dollars Swiss zooming out let's get a bit more zones drawn from a demand perspective so we've got this all this area here as an area of demand and we've also got just lower zone right here from back in August 2021 and so I'm actually a buyer of the Swiss Frank but not again not against the dollar but dollar Swiss not really interested in in in this pair in trading this pair but if you are then really your zones you're the don't you're looking for depending on whether you're long or short are going to be pretty much where we are now if you're looking for short trades probably a bit higher into any of these zones in 95 50s 95 round numbers and then you're looking at any short trades if you're looking for long trades then this would have been the best area to look for long's first touches of over zones as usually the best but if you are looking for a trade maybe I have to wait for you know a bit of a deeper pullback but I'm steering clear of this currency pair dollar CAD again we could see some some dollar selling depending on the obviously the week and what happens with a CPI the Canadian dollar not doing so well due to commodity prices at the moment but there is a trade idea in China reopening and so if China reopens successfully and gets their COVID infections down then and they start to really kind of grow from a GDP perspective in fact commodity currencies you know could actually do really well so again where are we from a buying or selling perspective I would say a decent buy if you're looking at the dollar from here but a fresher zone down to the one three twos is probably the better zone to look for any kind of buy trades for the US dollar for the Canadian dollar you're definitely looking at a fresher area of supply before looking at getting sure I would say definitely above this area here is one three sevens before looking at getting long on the Canadian dollar moving towards the New Zealand dollar US dollar and again New Zealand dollar will benefit from China reopening and so if or even some dollar weakness you probably will see maybe prices go to the upside so the dollars pretty much going to be a sell across the board if CPI comes in as a week at least in the short term you know because of the value has to the value of the dollar has to be readjusted so you know we could see it buy right now I would probably more buy the New Zealand dollar based off of China reopening and positive reopening as well which again the analysts are pretty much saying it might be the towards the second quarter of the year and so any pullbacks into demand zones decent buying opportunities even low would be better it's a bargain price and then any you know short trades looking to buy the US dollar would be decent around the 65 to 66 area pound dollar pound dollar my bias is for a short on this regardless of how you know the the US Federal Reserve may be easing up on interest rate hikes I do think that the the UK is in a worse position Sunax he's our prime minister Rishi Sunak Sunax growth strategy missing as former bank says sorry former bank economist so Rishi Sunak is still missing a plan to boost the economy a former bank of England chief economist has warned as the UK is forecast for a recession and the one of the things you have to be obviously aware of is the fact that you know who which country is going into a recession first right because that is going to hinder their the currency upside potential so Andy Haldane are said on Sunday there is not really a growth program at all alright as Prime Minister defended the scale of his ambition to bring inflation down and so yeah you know which is given it all the talk if he hasn't got a plan then ultimately you know he's not gonna save the economy right look what happened to Liz trust when she had a plan what she said that she had a plan but when he analyzed it the bond market didn't like it right and and the pound plunged and so if Rishi Sunak you know gets found out in terms of you know it's all just lip service but has she hasn't got anything in place then you can expect the same to happen to the pound so for me you know I think any pullbacks to any supply zones is my bias so any moves up especially up top there I think that's nice and then you have got decent zone right there as well so any pullbacks into the 122s and especially the 124s I think I'm gonna be really nice bias for the dollar if you are looking at getting long on the pound against the dollar maybe in the short term then you do have demand zone there which it kind of broke through slightly so I'll probably just use this demand zone here and you've got another one down at the 115s to 111s quite a wide demand zone there but but yeah that's really where you're looking at if you're looking at buying euro dollar so euro dollar wouldn't surprise me if prices you know went a bit higher we've been seeing in fact in the group that some of the some bank targets you know can arranging an auctioning they think that maybe the 110s could actually be met at some point again it depends on you know what happens in Europe and also with with the Fed and inflation and so I think again my bias is still to the short side so any pullbacks for me of buying opportunities for the dollar depending on obviously you know CPI as well and how bad or actually how good it is right I'm actually short in this trade already got in short from up here and so it's a profitable trade took some profit off and so I've got a position or two still remaining on here with my stops moved down a bit some you know I'm doing okay let's see what happens though and yeah if you are looking to buy the euro you've got demand zone there which it has you know reacted from and again I wouldn't surprise me if prices did you know come up to this fresher area the 108 but for me again I think that's a shorting opportunity I don't think the Europe is a bunch of roses at all not at all regardless of you know what the you know the at the analysis I want to get that word out is on the on the dollar you're always comparing you know the dog with the least fleas Australian dollar I think it's gonna be a great buy if this China and it already might be right but I still think it will have a lot of links to go if China reopen successfully so if you start to see prices pulled back to an area and but the Chinese risk you know risk on sentiment is prevalent then I think any moves back down to that 66 67 area I think is really nice even better would be you know 61 62s but again just like every other chart against the dollar you know you've got an area here here here which has been touched several times so probably might expect technically prices to kind of break above that but that could be a decent shorting opportunity around the you know 70 cent area again not be a pair that I'm looking to trade just yet although it could be something in the future Aussie yen again my bias for now I think is definitely to the short side so any moves to the to the upper side especially if you know risk off you know global growth China starts a stall with their with their GDP then I think this is going to be a really nice sell this 95 42s if prices can just come up there slightly and then for any kind of sell trades again your curve control the central bank the RBA are really kind of you know reducing rates just like all central banks right so it's not just the Fed that are producing rates it's the Canadian you know Bank of Canada the RBA you know there's a lot of other banks that are reducing their hiking and so you've got also a central bank in the Bank of Japan that could be actually hiking rates so there's a convergence trade right there anyways if you are looking to buy then really the area to look for any kind of buys is going to be down at the what's that the 88 so that's demand there and then we've got some demand here 85 50s 84 would be where I put a little to target for any kind of profit-taking if I can get in decent short but again some conflicting information depends on how China reopened finally gold right this I was saying this for a while the central banks are looking we're buying gold and as prices were going down yeah what they were doing was just accumulating accumulating accumulating right and this is evidence of it you can see it you know to the upside China extends gold buying with fresh flows to central banks China reported an increase in its gold reserves for a second straight month topping up holdings against again after the its first reported purchase in more than three years so that should tell you everything you need to know right you know looking those girls buying gold down at the 1640 not trading it you know just buying it and so yeah this is basically what's what's happening with you know the dollar potentially weakening into you know the third or second half of the year as they you know start to hold rates inflation is coming down but potential recession talk global recession talk again if China don't get their act together but could see gold look to strengthen and of course you know with China buying gold these central bankers are a clever bunch and so you know it's always good to you know ride their coattails so if you do want to get long on the dollar really looking for I'm sorry long gold you're looking for really any kind of pullbacks into any of these zones these demand zones you do have some supply right here supply right there but personally my bias although I'm long dollars you know I can be long gold at the same time I do think that long gold on a pullback is you know is is decent and again I'm not necessarily trading this more more of an investment strategy so let's see what happens with that alright guys that's it for this week I hope you enjoyed the analysis and I hope you have a great trading week and take care