 Hi, my name is Leon Rowe, currency trader and trading coach at Trading180.com and welcome to this week's supply and demand, forests and gold, fundamental and technical analysis. Getting into the week ahead, starting the 10th of July and so next week the US central stage will be taken by the June inflation report, the CPI report followed by speeches from several Fed officials. Additionally, investors will closely watch the Michigan consumer confidence index, producer prices, exports and import prices. Furthermore, the Bank of Canada and Reserve Bank of New Zealand will provide updates on the course of monetary policy, which is going to be very important. June inflation figures are set to be released by China, and other important releases include China's trade data, the German ZEW Economic Sentiment Index, UK's May GDP growth and labor data, as well as Australia's business and consumer sentiment, and you can see more and read more about the week ahead on the Trading Economics website. So let's go, actually matter of fact, before we go to the charts and the fundamentals, if you are a member of the Trading180 Mentoring Group, I have uploaded the members weekly fundamental and sentiment analysis, as well as the technical analysis videos, which goes into obviously a lot more depth as well as the previous week's videos, 5th of July with a group call webinar. So in case you missed that, you can catch up on the webinar we had on Wednesday. So let's get into the charts and looking at the dollar index and dollar index, just a measure of dollar strength against various currencies like the euro, the pound and the yen. And what we see here really is just a pullback. So fundamentally, we had the, from a data perspective, the US jobs growth calls, but wages signal labor market is still strong. So payrolls growth revised down by 110,000 in prior two months, wages increased at their faster than expected pace in June, which is a data point that the Federal Reserve is looking at to determine rate hikes. And so US jobs job gains moderating June, while wage growth remained firm showing a strong enough labor market to keep the Federal Reserve on track to raise rates this month. And so that should keep the dollar supported. Yes, the headline figures weren't great, but I said wage growth was actually still sticky as well as unemployment data as well. So the Fed is still looking like they're going to hike at least two more times. So if you are looking to get long, then this is a decent buying opportunity. Also as well, we've got CPI figures this week. So you know, depending on how that comes out, although it should, the expectation is that it probably is going to remain sticky, the dollar should be supported and probably looking like a buy. But all bets are off if inflation comes in lower than expected, because then the expectation for rate hikes diminishes. And then the market has to reevaluate what the reevaluate, what the dollar exchange rate is actually worth. And so CPI comes in sticky or higher, then you're looking at that for the dollar index and so it's jumped across the board when it comes to the dollar. And if CPI comes out this week, you're looking and comes out lower, then you're probably looking at at least a fall back to the 100s least on the DXY. Looking at the dollar yen and the Bank of Japan are potentially looking to adjust their yield curve control and monetary policy. So going to Bloomberg, yen rallies most since March as traders unwind their short positions. And so the market has been heavily short on the end because of monetary policy. The Bank of Japan have been one of the banks that have been quite dovish. And so Japanese currency rallies amid broad dollar weakness and shorting yen popular trade on Bank of Japan's policy divergence. And the yen surged the most since March against a broadly weaker dollar after softened and expected US payroll data prompting traders to unwind short positions. Now the rally comes as traders reassess a strategy in which the yen has acted as a key funding currency in carry trade. So you're pretty much borrowing the yen at a lower rate and investing it in a higher interest rate currency, which would be, for example, the dollar, even the pound or the euro. So investors have also boosted short positions on the yen as the currency moves steadily lower this year amid widening divergence between the Bank of Japan's easy policy and aggressive hiking cycles for other central banks, notably the US and Europe. And this is a quote which says, I don't think we'll see a complete unwind of the yen carry trade just yet, but it had gone a long way in Q2. So this is profit taking position adjustments, said Brad Beechell, a foreign exchange strategist at Jeffries. If volatility stays high, then it will continue to unwind. But if volatility stabilizes, then carry junkies will jump back in. And so again, looking at the yen, you know, that demand zone obviously didn't work. It wasn't seen as a bargain price. So there's 143s, but I do think coming down to the 142s, 141 area is going to be interesting. We do have not only a demand zone there, which made higher highs, but we also have a level that has been traded and bought and sold in the past. And so this is going to be the first area to look for potential buy trades. If that doesn't work out, then a move I think probably back down to maybe the 139s could be actually a really nice level, as you do have some support and resistance in that area as confluence as well. So decent areas to look for some long trades. If you are looking at buying the dollar, if you're looking at buying the yen, then really a pullback up into the 145 areas in that zone there in anticipation of your curve control to potentially occur in July. If it doesn't, then you're probably looking at, you know, this area being a really nice demand zone. The price may push past the 144, 151, 145 areas because the expectation of yield curve control will then be pushed back into the future. It may come maybe September, October time. So again, you have to kind of be a bit cautious in terms of taking major, you know, increasing position sizes, very uncertain time. But I do think that there may be some disappointment as Ueda is quite dovish Ueda being the Bank of Japan governor. He's quite dovish. So this could be actually a quite a nice area to look for buy trades if the data supports the narrative. The dollar data does support the buying this week with CPI. Dollar Swiss and dollar Swiss has come down to a really nice zone. Again, with the dollars could be a potential dollar buy again this week. But you also have another central bank, which looks like they are still hawkish Swiss national bank can still can handle more rate hikes. SMB Schlegel says that SMB sees no risk to financial stability due to capital buffers and central bank vice president comments in newspaper interview. So they are very hawkish, even though they've reached and achieved their 2% target inflation target. But I think the reason why they're still hawkish is because they expect price or inflation to still remain quite sticky in the future. So rising inflation. So I think they want to really kind of get a handle on inflation. I mean, they've got a handle on inflation, but they really want to stamp out any kind of inflation threat by continuing to be hawkish. And so that obviously is playing into things. But I do think that if there is positive, and I say positive, but if there are if the Fed hike at least and continue to hike or seen as hiking as two more times, then I think actually this is actually a really nice area to look for potential buy trades. And so any pullbacks into that deeper area, 88, two areas decent buy, if you want to be a buyer of the Swiss franc, then you're looking at that area there as the first zone to look for short trades. And again, just for some confluence, you do have a level of resistance in that zone right there that has been traded. If you drag that back right here, it looks like it's been traded in the past. Got support resistance, resistance there, resistance all here. So that's just a bit of confluence with the trade looking at the dollar CAD and the Canadian dollar this week. Again, it's going to be in the spotlight. And so rate hike seen by all Canada's big six banks on strong job status, a 60,000 gain triples forecast, even as unemployment rate rises, CIBC joins peers in predicting McClellan will move again in on the 12th of July. So all six of Canada's main commercial lenders now expect Bank of Canada to raise interest rates next week after the country's labour market tripled expectations in June. So you're seeing some Canadian dollar strength, some dollar weakness, but I think the Canadian dollar is a potential buy not necessarily against the US dollar, more trade against something like the New Zealand dollar or the Japanese yen. But yeah, you've got some decent levels to look for trades if you are looking to buy the Canadian dollar or buy the US dollar against the Canadian dollar. So pullback into that zone would be quite nice and really a pullback into we've got a level of demand actually right here. And that is going to be decent for a buy trade on the US dollar. But with both central banks looking to hike rates, it's not really a pair that I'm really interested in. But I think these areas are going to be especially this lower area, this one free one area is going to be technically I like it. But just from a fundamental perspective, I don't really like the EVRA trading this pair. Unless for example, the Bank of Canada come out after their their rate hike and say that they're not looking to hike rates anymore and looking to hold, then and the Fed are looking to continue to hike. Then in fact, this demand zone could be all these demand zones could be quite nice buying opportunities for the dollar New Zealand dollar this week. The New Zealand dollar again seen as actually looking to I think they're looking to hold rates one second. Where did I put that? New Zealand economy. Here we go. Right. So the New Zealand economy firms are downbeat on the economy sales and growth slows. The New Zealand companies are pessimistic about the outlook for the economy and their own trading prospects as slowing growth dams demand for their goods and services. And so central banks typically don't want to hike during an economic downturn. And from what I've read, pretty much the RBNZ, the New Zealand central bank are looking to hold rates. The consensus is that they will hold rates. And so as they're still looking to hold rates, the economy isn't really picking up yet. In fact, the economy is in a recession. I think the path of least resistance should be to the downside. So any moves probably from now or any of these zones I think are going to be really nice shorts. And again, you'd need the combination of a hawkish Fed and the data to support buying the US dollar as well as data supporting the fact that the New Zealand dollar and RBNZ are not looking to hike rates. If they do surprise the market by hiking rates, pretty much all bets are off the table. I think the New Zealand dollar will fly to the upside. There's no resistance or supply zone that's going to stand in the way of the market repricing exchange rates. And so you're going to definitely see the New Zealand dollar appreciate as the market has to revalue the New Zealand exchange rate on rate hikes because I think they're priced in pretty much rate holds. Looking at the pound and the pound is just ready from strength to strength. Clearing that off the table and looking at these areas of demand. Now, the pound is in the short term should be a buy, but there are cracks starting to show markets turn against UK as inflation and growth outlook darkens. So Bank of England is struggling to rein in soaring prices and pivotal wage in inflation data due out next in the next two weeks. So markets have turned against the UK for the second time in under a year as the outlook for inflation and growth darkens for an economy that's already lagging behind the other group of seven nations. And basically what this is saying is that the more you hike is the central bank's hike is the more the economy contracts or contracts. So if central banks are seen as being too aggressive, then in fact a recession is probably due. So if you do have problems where the inflation is too high, the central bank is hiking, but the economy is going into a recession. It makes it very, very tricky. And what's known is I guess stagflation where inflation is rising and the economy is falling or contracting. And so they are behind the curve. But because the rate hikes haven't really had an effect on the economy just yet any economy is holding up. It means that the pound is a buy for now. But as soon as the economy does start to show a contraction, then you may start to see in fact the the pound become weaker. And so I think this is a really nice technical area to look for short trades. But that would depend on you thinking that the pound is going to be a sell and the dollar a buy. At the moment, it doesn't seem like that way. It seems in the short term, we are at the you know, the pound is the one to buy. So if you are looking for a buy trade, then maybe just wait for a pullback. You could trade both sides, obviously, you could look to trade it down or then higher. But then there's no guarantee that prices will actually, you know, pull back here, right? So it's best to just wait for prices to do what they do, have a plan when prices get into that area, then look for your your bias. But if you're looking to buy the dollar or against the British pound, I think this is a really, really nice area to look for some short, if you think that the CPI data is going to come in, you know, hide and expected in the Fed are going to be hawkish. Looking at the Euro dollar and Euro dollar has made some new, I say new high, but it's broken past this, you know, lower high, lower low made a new high past that. But from a fundamental perspective, it looks like Lagarde and the ECB are still quite hawkish. Lagarde says ECB won't stand by idly if margins and wages rise. So they won't hesitate to act if officials see simultaneous uptick in both company margins and wages, President Christine Lagarde said. And so they still have more work to do to bring inflation under control. So that sounds hawkish to me and the hawkish central bank typically supports the currency and wants to appreciate the currency. And so I do think that any pullbacks into that zone could be a buying opportunity. If the data supports, in fact, the dollar hiking rates too, then the upside is going to be capped. So I think any move up into the highs, maybe the one 10s or even like the one 11s is going to be a bit limited, because if you have two central banks that are looking to hike or two that are looking to hold, then you tend to have what's known as a ranging market, what's really known as an auction. Whereas if you have one central bank that is hiking rates and another that is not, then you tend to get trending markets, because the market is buying the currency that is looking to where the central bank is hiking rates, right? So you could have a situation where this is the high right here, and that is, and this would be the low right here. And that's an agreed range or agreed auction between buyers and sellers about the exchange rate that's seen as expensive and expensive exchange rate. And that's seen as a cheap exchange rate in the middle of that is fair value. So again, not really a pair. I was in this trade to kind of took some profit. It was long, but then took some profits on I think it was Friday after the data came out. I thought the dollar was going to actually strengthen based off of inflation, but prices went to the upside. But I do think that if you are looking to buy the dollar, this is a better price to actually go short. But let's see what happens with that pair euro yen, again pulling back based off of yen, potential yen, strength and profit taking. But you've got a nice area right where we are to look for some buying opportunities. If not, then further down, a bit further down, one five fours is going to be decent. And beyond that, you have to wait for really a deeper pullback down here, unless you get in fact somewhere between this zone where you get proven demand. And then you get a pullback into that demand zone before looking at getting long. But in anticipation of your curve control, I think this could be a potential for a sell. In the past, the Bank of Japan has disappointed. So I don't know whether they will, but let's see. But that would be a decent short to get in on and start to buy the yen if it pulls back towards the end of the month in anticipation of that monetary policy change on the yen, looking at the euro pound. And again, as I was saying, when you've got two central banks looking to high crates, you tend to have what is known as an auction, right? As a, as a ranging market. And so this is basically what we're seeing right now. And between this high and this low, we can actually move this up. In fact, let me just get rid of that. We can move this up to here and we can move that actually down to here. It's made lower highs, lower lows. So I think the new ranges from this high, or this low, sorry, up to this high, if you want to be long or short on the euro or British pound, technically, you do have a decent area as well. Support in that. We have support and resistance within that, that the highs there. But again, with both central banks being quite hawkish, it's difficult to kind of determine the direction of travel. And but there is obviously an opportunity if you think that the ECB is going to be the one to buy. In fact, down here, I think that's a decent buying opportunity. But again, how far will it go does depend upon how hawkish or the ECB are or how dovish, I won't say dovish, but you know, any changes in the Bank of England and their hawkishness with rate hikes. So yeah, those are really your options this week. And then if you're trading that pair, then you've got the Australian dollar, US dollar and the Australian dollar this week. They opted for a hawkish hold. So that but keeps the door ajar for more hikes. A decision will allow RBA time to assess economic outlook risks. And reiterates will do what needs, what's needed to return inflation to targets. And inflation is still high. They surprised the market by actually holding rates. I think the market was expecting a hike, but they decided to take do another hold. So they held earlier in the year, then hiked again, then they're holding again to see the effect of rate hikes in the economy. And so but they it was seen as a hawkish hold as they were still quite hawkish in their narrative. So if you do want to be a buyer of the Australian dollar, then you're really going to have to wait for prices to even pull back down to this 66 cent area around here. There's not really a demand zone there to be fair, but there is demand there. So I mean, you could potentially I guess draw it like that. Don't like that because it hasn't really made a new high. So it's not it's not the strongest area of demand. But the best area would probably be to look for any kind of pullbacks down here. If you think that the Australian dollar is a bargain against the US dollar, again, not really a pair that I'm looking to trade at all. As you've got two central banks who are still quite hawkish. So not a great pair to look for trading opportunities fundamentally. But yeah, I think those are really just your options. And then looking at gold and gold with a stronger dollar is making lower highs, lower lows. Again, all bets are off the table. If CPI comes out this week and is below consensus, then you've got yourself a trade right here. In fact, decent to the upside. One of the things fundamentally that is happening with gold is that China central bank boosts gold reserves for the eighth month. So people bank of China holdings rise 23 tons to in June taking total to 2330 tons economic and geopolitical risks, driving purchases of bullion. So yeah, you've got China added this to its gold reserve for an eight consecutive month of economic and geopolitical risks, as well as the desire to move away from the US dollar driving purchases. And so you do have that supporting you, whether it's enough to keep the dollar supported is, and that wouldn't be just China, of course, that the other central banks probably doing the same thing. And if they're looking at gold for a longer term play, then down to these 1900 prices are going to be seen as a bargain. And so what you do have is this was seen as an absolute bargain down it back in March this year. This was seen as expensive. 50% of that retracement is fair value. We've come down to discount prices. So anyone and big entities who really wanted to look to buy gold on risk sentiment dollar depreciation are getting in and buying gold for quite a decent discount at the moment. But will that continue in terms of, you know, gold depreciation, or once the dollar does start to depreciate and devalue, you should see gold, you know, move up to the upside. But where we are now, I think it was really nice, technically, support and resistance within that demand zone as well as some some confluence, one of the one of the confluences we look at. But overall, I think, I think for now the dollars, I mean, the gold may be under pressure, especially this week with CPI. But if you do want to be a buyer of gold, really kind of look for a pullback into maybe the eight just below the 1890s for a potential buy. Or if you're looking to short gold, then pull back into the underside of this supply zone to look for a short trade right there. So that brings us to the end of the analysis for this week. Hope you enjoyed it. Don't forget to like, subscribe and share the video with your fellow colleagues. Really help support the channel to get the quality information out to traders who need it. And I wish you all a fantastic trading week and a great weekend. Take care and speak to you all soon.