 Hi, my name's Leon Roeb currency trader and trading coach at trading 180.com and welcome to this week's forex and gold fundamental and Technical supply and demand analysis if you're a new watch a warm a warm welcome to you And if you're returning an equally warm welcome to you and doing something slightly different this week And this is because trading economics don't have their their week ahead analysis, so I guess I have given Gonna go over Some bank analysis from a bank that one of the banks that we watch MUFG and talks they talk about the key events this week and Yes, so it's this is something that the the private members Get access to so this week in the week ahead we're looking at the RBA the Reserve Bank of Australia and the Reserve Bank of New Zealand and the next G10 central banks Expected to tighten monetary policy further in the week ahead The RBA is expected to debate the merits of delivering one more larger 50 basis points hike or slowing the pace of hike to 25 basis points as the policy rate approaches their estimate of the neutral rate of at least 2.5% so neutral rate is basically where they think that the interest rate should be Where it doesn't affect the economy positively or negatively. It's like a you know, the economy's not too hot or not too cold kind of thing a nice balance So the Australian market is currently pricing it 37 basis points of hikes So putting more weight on the RBA to deliver on the RBA delivering another 50 basis points hike So that's what we're you know is expected as we usually would expect the market has probably priced that in you know to some degree and Is probably looking forward to more of what they're likely to do within you know the the following Central Bank hikes and to what degree they're looking to hike We'll get into you know the the Australian dollar a bit later in terms of against the US dollar I still think that the the Aussie dollar at the moment in a risk-off environment is a Is a sell so selling the Australian dollar against the US dollar But there could be signs that things may be turning around for the dollar But again, we'll get into that in a little bit The RBNZ is also expected to deliver another 50 basis point hike and leave the door open for another But for one final 50 basis point hike in November before slowing the pace of hikes next year and all central banks You know we're gonna look to probably look to slow their their hiking in terms of the amount of hikes they do as well as the Amount of hikes or that you know whether it's going to be 50 basis points or 25 basis points Because a lot of the banks like for example Australia and or especially for example New Zealand dollar The RBNZ has been Hiking on a hiking cycle for oh, I think maybe about a year maybe over a year I think they were one of the first central banks to start their hiking cycle last year So, you know, it's about time that they start to to put he slowed down the same thing with the Australian dollar The policy rate will then be approaching the RBNZ's projection for the terminal rate between 4.25 percent and 4.5 percent and Just this little bit here before we get into the technicals and some more fundamentals So the main economic data release in the week ahead will be for the US economy So that's the main data the latest ISM surveys for both the manufacturing and services sectors will be watched closely To assess if the US economy remains on course to rebound in a third in a third quarter or Q3 After contracting in the first half of the year the drop in the US gas prices has helped to lift confidence in the services sector In recent months while confidence in manufacturing sector has remained weak So the non-farm payroll report will shed more light on tightness in the US labor market Employment growth is expected to moderate but remain strong. So average hourly earnings growth has remained relatively stable recently Helping to dampen fears over a price wage spiral. So those are really the main Macroecon like data points that the market is focused on what at least MUFG are Which would probably be what a reflection of many other banks as well But yeah, let's get into some of the technicals and a bit more fundamentals So starting off on the dollar index dollar index is just a measure of dollar strength against major currencies like the Euro the yen and the pound and you know zooming out over the past year Or the year to date really from the from the beginning of this year and you've just seen dollar strength from you know Because Fundamentally the dollar has been really the stronger of the pair. Also. It's benefited from a risk-off environment The dollar does tend to react in a risk-off Environment where investors will put them money into the dollar in times of uncertainty fear and doubt So you've just had a really kind of strong dollar, which is Really kind of effective goal, which is strange but not strange. It's logical But it's you know, I would have thought that gold would have done Would have probably gone up in terms of in the last maybe six months or so But I still believe that gold will go up and I'll talk about that when I get to gold a bit later But looking at the dollar from a fundamental perspective You know the Fed begins to split on the need for For speed to peak rates so discussions Discussion isn't about changing course as rate hike Definite and over tightening to show in financial conditions Connor Coronado says and so it says that the Fed Officials are starting to stake out different views on how fast to raise rates as they balance hot inflation against rising stress in financial markets because I Not to get into it too much But and it's difficult to you know to basically try and summarize certain things in you know a minute in less than a minute but understand this is that The if when you when you when central banks high crates it can have a negative effect on the economy, so You know, it's yes It's so it's all good as long as the economy can support rate hikes But you also need to see the effect of those rate hikes play out in the economy and and so You know with with the feds, you know rapid hikes, you know Actually risks missing economic shift and sealing a recession is an opinion So policymakers moving too fast to see the impact of actions so far, right? So, you know because they've been hiking so aggressively to try to contain inflation that in fact, you know The the effect of actually high, you know rate hikes on you know borrowing and lending and business costs, etc Is is yet to be seen and fully materialized So, you know monetary policy acts with lag Yeah, and may take months to be felt So this is you know quite interesting as well So fast and furious a Federal Reserve tightening risks slamming the economy into recession with economists worrying about his commitment Sorry, it's committing another error after being slow to respond to rampant inflation and so pretty much just summarizing, you know what I said and Yeah, but it's obviously yet to be seen you've seen obviously massive, you know rate hikes to try to get inflation down But as I said the you know when you hike interest rates As aggressively as you have and you know, you make the currency expensive But then again, it can take, you know, maybe a few months or two or three or maybe five or six for it to Sorry for the effects of those rate hikes to filter food to the economy. So You know the market seems to think that You know a recession is pretty much on the cards and you know, you shouldn't really look at the US In a vacuum in terms of just focus on the US member if you're a currency trader you're trading in pairs Which means that you should always understand What currency is the the best, you know out of the worst or what is the worst out of you know, the bad bunch Right. So as much as you might look at the US and go all the heading into a recession Would it be a deep recession or will it be a mild recession or a shallow recession, right? You know, who's worse off and and so I think lots of countries are probably looking at recessions But which one is likely to you know, either have a shadow of a session or Are likely to probably avoid a recession and those are the ones you should buy in comparison to the Currencies that are maybe heading into or to be economies that are heading into a deeper recession and may not get themselves out Of one for a while, right? So For now at least in the short term going towards the end of the year Unless data proves otherwise My bias is still to buy the dollar and also as well just in case you haven't watched it already, you know It's really important that you do watch this This this video that I've got free webinar And it's the three steps to generate the profitable forex trade ideas If you don't understand the relationship between, you know interest rates inflation and the economy This webinar will pretty much spill it out for you guys because this is you know What you need to know in terms of understanding where the trends are likely to occur and you know It's amazing that traders call themselves currency traders You know and forex traders and you know don't apply Fundamental analysis, you know, you're really kind of trading blind in my just in my opinion, of course You know what I say my opinions absolutely correct but you know my hats off to those people that can trade without fundamentals, but You know for me fundamentals give me a massive edge over You know technical traders in terms of understanding what you know value and what you should be buying and selling in the medium to long-term Anyways, and hopefully it does give you that advantage and it has been given Advantage to lots of traders in the private members group that I've run. So Getting back to the dollar Technically, you know, will this this trend end of course is going to end at some point Then and there will be an opportunity to potentially sell the dollar Not too sure whether that would be you know now for me I'm still looking just for buy trades. So any kind of pullbacks, you know our confluences with other currencies I guess in terms of you know, if you're looking to buy the The dollar yen or the dollar Swiss for example, you want to see Maybe the the the dollar index actually come down into a demand zone It's hard to turn around and then that could be some confluence with regards to You know buying the dollar yen dollar Swiss, maybe dollar CAD For example, if you choose to you know buy those pairs, of course, you don't necessarily have to this isn't financial advice but my bias is you know still continue to the to the upside and so If my bias is to the upside then I'm only looking for buy trades and I'm going to ignore You know any kind of moves to the downside I'm not trying to trade both sides and let's see what happens I do want to deeper pull back on what I just want to see where the monthly moving fair value is so Understanding where the monthly moving fair value is which is basically just moving average But it's what moving average is telling you is basically fair value a fair value is and I tend not to trade I'll take trades If prices are above that monthly moving fair value and less of course I want to short this if I'm looking to short the dollar then yes I will but if I'm looking to buy the dollar which I am then Everything above the monthly moving fair value is going to be expensive So I'm waiting for a pullback, you know for some sort of confluence on that Moving on to the dollar yen and dollar yen again It's been very the dollar has been extremely strong especially in the face of Central Bank intervention the Bank of Japan intervening You know last week or a week before now time is flying. So Will prices go higher the higher it goes The more that the Bank of Japan will have to you know intervene to protect the devaluation of its currency So the central banks don't like when their currency devalues too much because Especially what I say rapidly anyway, it can help the economy does boost exports, but at the end of the day You know the central bank has made it known that they you know won't tolerate certain, you know Massive devaluation. So let's see how far this can if it does actually, you know go higher then Let's see how high it will go But again, as I said, I think the central bank is going to be capping that upside with their end interventions So where we're at now It's a bit of a strange chart because we're not making higher highs or higher lows prices are in this auction Between this high and this low and we really haven't got any strong demand or supply zone. So Depending on which way you want to be a buyer I do think that if I'm want to be a buyer then Don't know. I don't know. I really kind of hesitate to draw any demand around here as I typically would But I do think that there is a there is another type of demand zone that you know, I don't really talk about in this video Daily demand videos and supply videos, but it is and some of the guys will notice. This is a CPR demand capture paying relief Trade setup you can see where trade is a court below that area there I do think that if prices come back to this zone Let me draw it properly matter-of-fact. So it's really from this load to here Is where I would probably if I was looking to buy this pair where I would look look to really kind of get involved I'm not looking to trade this pair personally I think there are better pairs out there to trade But if you are looking to you know, buy the dollar against the yen and the one for one 50s to the one 40 36 is probably going to be a decent area to look for potential buyers But um, yeah, it's not really a pair that I'm personally interested in but I'm interested in buying the dollar dollar Swiss Last week we I was saying last week that pretty much, you know The more times the level is touched as weaker it becomes and you had this massive move to the upsides On the dollar and then you had a bit of a pullback prices didn't actually quite touch the supply zone Unfortunately, but it took out that so that yeah, that's supplies only but it took out the previous supply zone And so with that being said again fundamentally, this is not a pair that I'm looking to trade But if you are then I think yeah You'd have to really wait for buying the US dollar for prices to come down to the one Sorry to the 9650 areas if you look into short then Probably back up into these areas here probably the absolute highest bar around that one cent area It's probably decent for a sell But again, this isn't the best trade in the world simply because we've already touched You know a fresh area of supply and the best times to really kind of buy or sell is when you see fresh areas of supply, you know being Being touched right so that was a fresh area of supply prices made lower lows came back up there, right? Same thing here laid lower lows came back up first touch And then that's that you can even make an argument for for this zone here from a demand zone perspective Yeah prices, you know spiked through but ended up holding probably a lot of Some liquidity hunting going on here, but the demand zone ended up holding And then prices went to the upside so depending on where you place to stop you may or may not have been stopped out But you know if you understood about value in this being a bargain price Then you would have probably end up getting back in again and making your money back and more so But dollar Swiss isn't something that I'm interested in personally, but those are your options looking at the dollar CAD and Yeah, the dollar CAD buying the dollar is expensive at the moment. You have to really wait for a pullback I think the nearest demand zone is going to be here In fact, it is there. I don't think it's there, but it is there and again, we're well above the Monthly moving fair value. So for me no trades above that not interested in that at all Not really interested in this pair even even though out of the two if I was gonna be a buyer I would be a buyer of the the dollar in a risk-off environment the US dollar that is in a risk-off environment And you're seeing basically what's happening There as well also as well, I did read somewhere that the Canadian dollar I think it was a we look at Citibank as well For one of our analysis and I think Citibank were mentioning that the Canadian dollar the Bank of Canada might be It's looking like they possibly maybe Looking to not hike rates or you know again, just like the the Australian dollars look to end their hiking cycle So let's see, you know, what happens here and against the backdrop of risk sentiment as well as a strong dollar And then you and the Federal Reserve continuing to hike then you're gonna see, you know what you're seeing But again pullbacks into that zone is where you are Looking at where the nearest supply zone to potentially short the dollar is you're looking back at you know two years And so for me, it's not really a trade or a level that I would look towards trying to short I have to have a good reason to buy the Canadian dollar Against the US dollar and I don't so it's not a pair that I would personally look to to try to short New Zealand dollar US dollar again saying this from for the past few weeks not really taking this this trade either the New Zealand dollar will lose against the US dollar in terms of risk-off environment and you're seeing what's happened To the downside so I think any pullbacks if you're looking to buy the dollar decent buys into that the market supply zone there Yeah, I think that's pretty much it if you are looking to buy the New Zealand dollar You really have to buy it based off of a change in risk sentiment, but that doesn't like it's gonna come anytime soon So the dollar is probably still a sell on this or the likelihood So any pullbacks into the 5950s or just above that into the six 60 cent area It's gonna be where the shorts would probably be and Zooming out. Let's look at one year. There's nothing for the past. Well five years. You're coming down to Five year lows Yeah, coming down to five year lows So we could even break that but let's see what happens But it's not really a pair that I would look to potentially buy like I said in this Risk sentiment does change Of course the RBNZ the hiking rates and it could hike rates more than what is Priced in and that would then boost the New Zealand dollar probably temporarily But again, I think overall you're probably gonna see more more short side Then upside excuse me Pound dollar The pound lots to talk about with the pound I guess but I won't necessarily get into every single little detail I'm sure you guys have read up on it, but I Guess just to summarize so last week, you know You had Liz Liz trust come out and quasi-quart ten deliver a mini budget which the markets didn't like and So the the issue really was that the bond market was wondering where the How the debt was gonna be repaid, right? Because if you're if the if the government are making a whole lot of tax cuts How how is the government planning to fund, you know the spending? And so there was a bit of a worry the Bank of England stepped in Started quantitative easing Again, and the market was happy with that or happier with that, but doesn't mean that The the pound is a buy. In fact, I'm still My bias is still to the short side with the pounds only looking for short trades and so looking back at this technically from a daily perspective We have prices heading really just back up to this to this Supply zone so that's really where we are anything below that was expensive So anyone is trying to get short around here was trying to get short Intra day you were you know buying at expensive areas and you probably would have been Guaranteed you would have been stopped out if you don't understand why you're buying We should be buying at fair value or above fair value So there's no point in chasing the market, right? But God is whether the market is going down. I mean you could obviously chase the market and make some money But personally, it's not really the smart thing to do and And so I'm I really wait for kind of pullback something for a pullback up into these one 12 if I can get if you can come back into this one 14 that would be fantastic for I think for a short trade again Not financial device Just telling you what I'm looking at but I'm going back to for example the UK and And one of the reasons why I'm short the UK is because the UK is that only G7 economy still smaller than its pre Covid size so revisions leave GDP 0.2 percent below where it was at the end of 2019 and UK avert immediate recession with surprise expansion in quarter and the second quarter But it's only just right so yes, it avoided the recession I think I think the market expected the the economy to kind of show that it was there was some negative growth This quarter, but I'm in the second quarter, but apparently avoided it So the you know the thinking is is that they're probably going to enter it into the third quarter So I'll read this bit here. It says the economy grew by 0.2 percent in the second quarter an improvement on the 0.1 Contraction first estimated the office of national statistics said That means Britain is not yet in recession as many had assumed so however past revisions mean The level of output is still 0.8 percent lower than previously thought and the slump is now likely to have started in the third quarter When output probably contracted because of the extra bank holiday for the Queen Elizabeth's funeral for Queen Elizabeth's funeral, sorry Bloomberg economics believes further declines are likely in the next two quarters So that's the likely Direction and path of travel with with the pound Obviously, you know, they every pretty much everyone else is you know recovered, but UK and even Germany's kind of flatlined So let's see what happens with the pound and I think the pound for me is still a sell based off of you know the economic I Guess the economy although I do think I do think my personal opinion is that they could escape Economic contraction if the fiscal policies If basically people go out and spend With the fiscal policies So, you know with tax cuts the whole point in tax cuts is that people feel richer and then they go and spend in the economy and boosts, you know boost retail sales and you know home buying and In general things like that right and it keeps the economy Keeps the economy going so if people don't you know save their money and actually go and spend Because of these tax cuts then you could see in fact some potential growth in the UK But I think it's way too early to Start seeing that for now And so my bias is to the to the downside and so any pullbacks on the pound are shorting opportunities In in my opinion and that's the direction that I'm going to be trading Of course, you could you know look at it another way and if you are then You know good for you and just just make sure you have conviction in you know You're trading you know what you're doing, but for me, I think it's still shorts all the way on the pound Especially against the dollar anyway Euro dollar Again, I'm my bias is to get short on this We've had a bit of a pullback of a couple of hundred pips a few hundred pips But if you're looking at this in you know over the course of the last, you know year It's not really a massive pullback. It's just you know an expected pullback, right? You're looking at you know this this this recent high Lower higher to lower low then we're probably back up to yeah Just about fair value into the bargain area practice We're still below the monthly moving fair value as well So anything any trade setups on the intraday around here personally not taking when you looking to take intraday setups above move monthly moving fair value so for me Hopefully looking for at least the prices to come up to parity and then that would be I think and really nice Short an opportunity and I think the further it comes higher is the cheaper it the year starts to become regardless or whether They are looking to high crates, which they are so going on to the euro Eurozone inflation at double digit record piles pressure on the ECB So consumer prices rose 10% from a year ago in September and it was estimated at 9.7 and data will Form the ECB officials before October's rate decisions. So the euro zones economic crisis Intensified with the first ever reading of double digit inflation piling pressure on the European Central Bank to keep raising interest rates aggressively and you know, I spoke earlier about the Federal Reserve and the fact that they're hiking rates aggressively and the And the effect that that has on the economy Or could have on the economy or typically does have any economy and pretty this way I think in my opinion the the US economy is better placed at the moment than the European economy the eurozone economy. I know what there's there's data that suggests otherwise, but I do think that In comparison, there's a lot more risk events going on in Europe That could you know really hurt Europe more than risk events that are going on in the US So with that being said, of course, I could be wrong, but you know, I think that being said the The ECB are hiking into You know a lot of weakness which I think will have eventually have a negative effect Or more of a negative effect Or a devaluing effect rather than an appreciating effect. I could be wrong again But it's just a bet that I'm taking and so the next eurozone hike is in focus as big move backs and this is a ECB updates of 13 of the governing Councils 25 members are speaking on Thursday and Investors prime for clues on next hike terminal rate and quantitative tightening so lots going on Coming up, but I do think that the euro is still a sell. I'm not saying that it's going to be a sell this week You know, please don't Misunderstand what I'm saying. I'm not saying the prices are going to go down here I'm what I'm saying is is that if price does come up to a zone where I would like to be a Seller and a buyer of the US dollar, then that's what I'm going to look to That's what I'm looking to take. So if prices do go up It's fine Right because it just means that you can buy the dollar against the euro for a cheaper price If you believe that the US should strengthen over the euro, but of course, you know, again This is all data dependent and I will obviously be keeping my eye on the data and seeing if the bite my bias does change But it hasn't changed for pretty much 18 months You know, I've had a short bias on the on the euro dollar for 18 months and You can see what's what's pretty much how it's played out, right? So Let's see what happens with that looking at the Aussie dollar Again the Aussie dollar I think the Australian dollar will be a buy at some point Just not now in terms of risk sentiment But I do think that the the Australian dollar is a is a decent buy Well and not against the the US dollar but if you are looking to take this trade or trade this paired and again, I think the The path of these resistance is still to the downside and not because you know the trend is to the downside Price doesn't dictate where you know where price is gonna go, right? It doesn't Because ultimately it comes down to you know, what what the fundamentals and value is saying because if If the market thinks that this area is a bargain for the Australian dollar versus the US dollar Then you're gonna see prices do that It's just as simple as because you know by the logic of technical analysis traders, you know, if if if the trend is your friend Then you would continue to see just prices continue to go down and go down and go down, right? But what makes it turn what makes it turn is, you know, several things one thing being liquidity, but the main thing is being value and And bargaining cheap exchange rates, right a change in the value So any pullbacks into supply If you're looking to buy the US dollar in the risk-off environment Is is pretty the preferred move? But if again, things do turn around sentiment-wise then I think the Australian dollars gonna be a very good buy against You know, I think a lot of currencies Australian dollar Japanese yen again, you're seeing the effects of risk-off as well as the The the intervention that this that the Bank of Japan has done and yeah, we see in lower highs lower lows here and Likely to continue seeing that for now So any I think any buyers if you're looking to buy the Australian dollar It's gonna probably be around there looking to buy the Japanese yen You'd really have to kind of wait for prices to pull back to that 96 areas before looking at getting Short on the Australian dollar and buying the Japanese yen I do think that the yen is starting or if you're not in already is a buy And especially because we've got a lot of risk events coming into the end of the year And I do think that the yen Will strengthen in terms of risk sentiment, but let's see what happens and finally gold so gold again, it's been a bit of a Sorry a bit of a strange one Because you would expect in risk-off environment the Let gold to be supported in a risk-off environment But again with with interest rates, you know and yield I guess on the US dollar going up to you know Going higher to at least around about 4% And the dollar strengthening is having a negative effect on gold as traders will Probably not like to hold gold because it doesn't pay a pay a yield or an interest And even inflation being as high as it is you would think that gold would be a hedge against inflation, right? But for the gold bugs out there who are watching the video Just remember this and if you go back to my June video, right good back to my June video Beginning of June or mid-June This was an article which basically said central banks to increase gold holdings over crisis concerns So central banks are very forward-looking. They don't looking, you know at the next week or the next month They're looking at you know the next year. These are the smartest people, you know, some of the smartest people in the room Right, they're running the economy. So emerging markets central banks are worrying about everything from inflation to supply chain chaos And now what's really key is Understanding this is understanding that You know central banks, you know see gold as a reserve asset and will likely increase Their holdings of the metal in the next 12 months, right? So they're increasing their holdings of the metal in the next 12 months according to a survey by the World Gold Council Remember these guys have forced or tried to obviously forecast and have forced that right? So I've spoken about this, you know many times before and if you don't understand that, you know, the banks will They've started basically back in June buying, you know, they're just buying physical gold, right? They're not they're not trading with leverage. So they don't care about being stopped out Whereas the trader does and what they're doing is they're increasing their gold holdings Which means that if they think that gold is going to be up here in the future due to, you know Worries and concerns and risk events then then they're basically just buying gold for cheap Yeah, that's all they're doing buying gold as prices get cheaper, which is what you should do if you feel that You're getting, you know bargain prices if you're doing investments And so, you know, they're doing over 12 months. So, you know, whereas, you know, retail traders have a very short-term mindset You know want to know, you know why prices are going down and you know and things like that the gold You know that the central bankers in a smart money who who are, you know, looking to buy gold are not concerned with You know what's going on this week and they're just looking at it as though well I can buy gold for cheaper for a longer time, right? Because you know when you start to see price go higher and everyone's chasing gold They've done all they're buying, you know, six to 12 months ago So, you know, they've got obviously scaling it takes them time because they traded buying with such size They have to, you know, buy slowly And keep their orders small and to not, you know, trigger the markets and things like that and these things if all central banks are buying You know, who's gonna be doing the selling? You know, so There's there's liquidity issues. There's slippage issues. So these things can take time to play out But, you know, again, the banks aren't buying just for it, you know for today or, you know For the month they tend to buy for, you know, a good two three years in the future. So Let's see what happens there for me. I'm still long on gold Although trading wise, I'm not really necessarily trading gold But my bias is to the to the upside if you are trading gold, I guess let me just Delete all those drawings then if you are buying it then I Guess your nearest zone at the moment is going to be really down from 2020 and I don't really like Using zones that are like two years old. So I would say wait for price to prove that there's, you know Buying there and then maybe a pullback into a demand zone before looking at getting Before getting long But for now, I think trying to time the bottom isn't Isn't the best thing to do But you'd probably rather wait for price to prove that there is definitely strong buying and then wait for that pullback anyways, I should matter fact if you are looking to sell then waiting for price to pull back into that supply zone and Look for a short trade there. Anyways guys, take it easy. I hope you enjoyed the analysis and Until the next video. Have a good one