 Hi, everyone. Welcome to today's webinar on fundamental trading strategy Part 1, brought to you by TickMill. Just wait a couple of minutes for everyone to tune in. So we are broadcasting this via Zoom, exclusively on Zoom. So this is the only platform where you'll be able to watch this webinar. So my name is Katen. And yeah, so just before we start, I can see everyone coming in. Hi, guys. Hi, everyone. Right. Okay, we also have the chat going as well. Right. So yeah, so at any point in time, please feel free to drop your questions, right? I'll be happy to answer all of your questions along the way as we progress through today's webinar. Right. Okay, I think we've got everyone coming in today. Mostly everyone is in. All right. Okay, excellent guys. Okay. So all right, so let's let's start. Okay, so today's session is on fundamental trading strategy Part 1. Okay, so just a quick disclaimer before we start, right? This material provided here is for information purposes and should not be considered as an investment advice. Right. The views, information and opinions expressed here belong solely to the author. Me today. Right. Okay. And also I would like to highlight the high risk warning disclaimer as well. CFDs are complex instruments. With a high risk as well. So please do all due diligence before putting on any trades. All right. Okay. Hi. All right. Yeah. Okay, the chat's working as well. Excellent. So hi, Neeraj. Hi, Paul. Okay, guys. Welcome. All right. Okay, so, so I said, okay, so my name is Kate. Yeah, Kate. I'm from a adverse fortune group. So if you have a part special partnership with Thick Mill, where we bring you the best analysis and webinars as well. EFG has been the best, has won several awards of which you can see our best effects research in 2019, 2020, 2021, as well as best equity research at 2020, 2021. So this was the technical analysis awards. Right. Okay, so now that we've got things going, we've got the disclaimers out. Let's just start. Okay, so today's agenda. Okay, what will we be covering today? We'll be looking at the information resource. So when we get all the info on fundamental, to help us with fundamental analysis. And we'll also be looking at central banks. What do they do with regards to monetary policy, their meeting schedules as well as potential interventions. And we'll also be looking at some of the key economic data and how it impacts forex movements as well. And for today's session will round up with the US dollar index and its composition. Okay. Right. Okay. Okay, so first of all, information resource. Okay, so the good thing is, I'm sure most of you have heard of Forex factory. So Forex factory is like the good thing is it's a central depository where we have the economic calendar. And not only does it have the calendar itself, it also has the links to the actual sources for each of the respective economic events or whether it's from the United States, the Eurozone, Australia, New Zealand, all the data links are provided in Forex factory as well. Okay, so you just, if you click on Forex factory, and then you look for the economic calendar, you will be able to find all the details. Right. Okay, Jamelew as well testing on the chat. All right. Hi Jamelew. Okay. So okay, so let's just have a quick look at Forex factory right so you guys are all familiar with this page Forex factory. So let's just run a quick example. Okay, so let's do today. Okay, all the timings in UTC plus eight plus zero, sorry, so that is GMT time just to make sure we're all in the time zone. This is GMT timing. Okay, so let's just look at. Okay, let's just look at from easy from March till now. Okay, so first of March till 24 April. Okay, so this is our calendar setting, and then we'll search and then you can. So you guys should be familiar with this you can set your timeframe. Period and then you can filter for the data that you're looking for so usually I pick the two most impactful options and of course event times I'll choose all the events. So let's start off with us data right because we all know this Federal Reserve is the biggest central bank in the world, and whatever they do anything with regards to monetary policy, or any other actions everyone is impacted by it right. So usually the other central banks will follow suit and will react in a similar fashion. Okay, so let's just look at from the US perspective first. Okay, so we apply the filter. We've got a few economic data points. Okay, so first we'll start off by looking for the Federal Reserve FOMC meeting event right that took place in March we had. Here we go yes on 22nd of March right there was FOMC meeting ran from 22nd to 23rd March. Okay, so over here you can see okay federal funds rate this is the interest rate. As you all know, if we click on this graph icon here you're able to see the history of how the Fed has been raising interest rates cutting them, and then raising interest rates again. So in this last year and a half the Fed has been aggressively raising interest rates. It is actually has been the quickest rate of increases since the 1970s, which was when the last inflation, highly inflationary period occurred. So, the Fed, together with all the other central banks have been raising interest rates in order to combat inflation. Okay, so we can see a brief history of how interest rates have been raised cut. Hello, and then raised again. Okay, now if you click on the folder icon. Right, we are able to get a brief description of what this economic data is all about, and where, what is the source of you click on latest release. It will take you to the FOMC website so the FOMC basically stands for Federal Open Market Committee, right the committee is made up of several members and the chairman. And of course, Jerome Powell should be a very familiar name for everyone. Okay, so over here, as you can see you will have the links for the previous years as well, and of course for 2023 so we are able to see the schedule for the items of the meetings. And not only are we able to see the dates upcoming dates. Right, so the next one we have in May, next week, right, all eyes will be on this, but not only do we have the schedule but we also have access to the statement to be able to read the statements as well if you click on PDF, if you wish you can feel I can read through the statement in detail to find out more exactly what you're talking about. Oops, okay, I didn't mean to close that, okay. And not only that you have also links for the press conferences because it's a two-step process. So the first is they'll announce the interest rates changes that they have done. And they will also release the statement and after which the chairman, Jerome Powell will run a press conference as well, where he will answer several questions and update things that are not included in the statement. So if you wish to watch the conference as well, you are able to do so. Okay. So this is here and also the other thing that gets released after each FOMC meeting are the minutes as well. So sometimes the minutes can have an impact on currency markets as the contents and details of the minutes usually might not be discussed in detail during the press conference or might not be even be included in the statement because as you can see the statement is quite a brief document with about four pages. And whereas if you want to look at the minutes, the minutes are more detailed, right, comprising of almost 10 pages of written text where they actually go and look at all the major discussion points. So this, that is why sometimes minutes can have an impact on currency markets as well. So this is where we can get all this information. Okay, so for the Federal Reserve. If you go back to Forex Factory, you look for the event called FOMC statement, Federal Funds Rate. Okay. So this is where it, like I said, click on the folder icon and then you can click on latest release. It'll take you to their website which is here and then you can go in detail, dive in and explore the minutes, the press conferences and the statements as well. Okay. Now, since we are on the topic of the Federal Reserve and the next meeting that's coming up next week, one tool that I like to use this is called the CME FedWatch tools. Okay, so if you want to key this in in Google, okay, so CME FedWatch tool whether you leave a space and only leave a space, I think it shouldn't matter, you should still get the right results. If you click on that, right, it takes you to the CME group and the first link is the one that we want CME FedWatch tool. So this is a very useful website where we are able to see the target rate probabilities for each upcoming meeting, right? So the next week, we're having the meeting on the 3rd of May. Current interest rates are between 475 and 500. So this is in terms of basis points. So what this basically means is 100 basis points is 1%. So basically we're looking at 4.75% to 5%. Okay, hi Neeraj. Okay, there's a question on best website for goal analysis. Okay, we won't be covering goal today. Probably I can try and do this in part two, right? Okay. Thank you for your question. Yeah, I will try and see if I can put this in for the next session. Okay, so, okay, so this tool tells us what the Fed is likely to do at the next upcoming meeting. So this website is always running and the target probabilities are always being calculated. So currently the interest rates are at 4.75 to 5%. And what this is telling us is the target rate. Okay, so let's just look at the upper band. So the upper band is currently at 5% or 500 basis points. And now there's a 85% probability that interest rates are going to be raised by 25 basis points. Okay, there's another question. Part two, which date? Okay, I believe just stay tuned on your usual TickMail website and your e-mailers. You'll be getting the information through those regular media channels, right? I'm sure the information will be released and marketed in due time. Okay, so what this website is telling us that there's an 85% chance that the Federal Reserve is going to raise interest rates by 25 basis points, bringing the upper range to 525 basis points. So that's 5.25%. So this website is constantly updated with the latest probabilities. So we know beforehand what the Fed is very likely to do. Okay, so once you know what the Fed is very like, you're basically anticipating what the Fed is doing, you don't actually have to wait for the meeting, right? So you already know beforehand what we can advance a few days and once what the Fed is going to do, it is very likely some of the moves gets priced in before the statement is released and the meeting takes place. So this is one tool that I would like to use and it's very easy to search for it. Just remember CME Space Fed Watch Space Tool. You can bookmark it for future references and you can also you'll be able to do it for track the probabilities for future meetings after next week. Okay. Right, so the CME Fed Watch Tool. Okay, so now if we go back to our slides. Okay, so we talked about the data links where we can get. Okay. Then we will also look at, let me see, what do I... Okay, so I showed you guys the links, right? Okay, so let's bring up the slides. Okay, so remember Forex Factory from there, you're able to look for the relevant economic event be it from the Federal Reserve, the European Central Bank, RBA Reserve Bank of Australia. Right, so what we looked at here was the Federal Reserve Monetary Policy Calendar. And these are all the other links related to GDP, which is by BEA Bureau of Economic Analysis. You have ISM which is Institute for Supply Management which releases PMI results, purchasing manager index surveys for the manufacturing and services sector. BLS is Bureau of Labor Statistics where you can get information on the employment report, CPI, PPI. Right, okay. And right, okay, so this is the data links. So primarily once you have Forex Factory, you can find the others and just bookmark all the relevant economic events that you think are important for you. Okay, central banks. Let's just quickly touch on central banks. Okay, so as mentioned earlier, the Federal Reserve is the largest central bank in the world. And when they raise interest rates or cut interest rates, it has a major impact on the rest of the world. Right. And usually all the other central banks follow suit. Right, so as we know for the last 18 months or so the Federal Reserve has been hiking interest rates aggressively. And this includes the European Central Bank, Swiss National Bank, BOE, BOC, RBA, RBNZ. The only central bank that stands out out of this list is the Bank of Japan. And despite rising inflation globally, sorry, despite inflation rising globally, the Bank of Japan is the only central bank that has actually maintained its interest rates and negative 0.1% while the rest have all been hiking aggressively. So there's a big divergence in monetary policy between the Bank of Japan and the rest of the other central banks. Okay, so this is also quite important because when you know what the major central banks are doing, you're able to see what we also would like to see is look out for divergence. Right. So what do I mean by divergence in monetary policy action. Basically, when one central bank is hiking, another one could be pausing or cutting rates. So in this case, let's just look at the Federal Reserve and Bank of Japan. Right, the Federal Reserve was aggressively raising interest rates throughout 2022, whereas the BOJ was keeping its rate as negative 0.1%. So you have a big divergence in policy actions. It is also reflected in the bond yields as well. And also ultimately it gets reflected in the currency pair, which is the US dollar and Japanese yen. Okay, so when we know that there's such a big divergence going on in monetary policy with regards to monetary policy action, it is probably logically, we would think that yes, the Federal Reserve is raising rates. Bank of Japan is keeping it at negative 0.1. And not only is the Federal Reserve raising rates, they were doing it very aggressively. It is very logical to think that the dollar yen will gain against, or the dollar yen will rise, right? USD, JPY, dollar yen will rise. And this is what has exactly happened. So if we were to go to TradingView and you look at the dollar yen. Okay, this is a, okay, hang on, sorry, this is a daily chart. Okay. Let me just zoom out so we can see the start of 2022. Right? Okay, so this was the period in March when the Federal Reserve started raising rates. Right, the first one kicked off in March and they raised 75 basis points. And in each of the first, I think three or four meetings, so this was the fastest and most aggressive rate hike action carried out by the Fed. While at the same time, the Bank of Japan kept its interest rates at negative 0.1%. So in this scenario, we can tell that, okay, logically, like we said, right? We're basically thinking if one bank is raising interest rates, the other is keeping it at negative, you would expect the currency pair. In this case, the dollar yen to rise, which is what was exactly happening. So once we are able to determine the longer term or the overarching monetary policy view for the central banks involved in this currency pair, we can see that, okay, the high probability trades are, is to go long. Of course, they are pullbacks along the way, but over the course of a few weeks of over two months, the most high probability trades were to go long with regards to the dollar yen. Whether you're a position trader, or a position trader over like a weekly outlook, or maybe two to three day outlook, the high probability trades would have been to the upside. So naturally, there's also pullbacks along the way. Nothing goes up in a straight line. Conversely, nothing goes down in a straight line. But once we are able to determine what is the overarching monetary policy framework in place between the Fed and BOJ, you can determine that, yes, okay, I will, I will be looking to go long the dollar versus the yen. Okay, so then we, as you can see all the way till November 2022, the dollar yen broke 152. So basically this means the Japanese yen was getting devalued very strongly versus the US dollar as the Fed raised interest rates aggressively to combat inflation. Okay, now, this brings us to another part of what central banks do, right? Okay, you have monetary policy actions, whether you're cutting rates, raising rates, keeping rates steady. Another thing that central banks can do is intervene in the open market, right? So these are called central bank interventions. So now why this is important? So interventions means they're doing something that is not part of the usual framework, right? So now in this period in October and October early November, the Japanese yen was getting overly devalued. And this is not good for Japan as well, because as a country, their imports become more expensive. Whereas their exports are more attractive to the rest of the world, but the imports become more expensive and this adds to inflationary pressures back in Japan. So during this period, the Bank of Japan intervened in the open market. So if this news was, naturally, was captured by all the big media outlets, right? So if you're paying attention to currency news, effects news, this you would have seen this intervention by the Bank of Japan being covered by various media outlets. So let's just type BoJ intervention 2022, right? So let's go. Yeah, okay. So let's just click on this one for CNBC. So Japan intervenes in the FX market. So what this means is the Bank of Japan, sorry. Okay, apologies for that. Okay, so the Bank of Japan was actively engaging in the open market, in the foreign exchange open market by buying the Japanese yen to stem its devaluation, right? So as you can see by this, by the bullet points here, Japanese yen was getting better. It was getting devalued to a level where it was not sustainable for the long term. So thus the Bank of Japan had to intervene in the open market, right? And by buying the yen to prop up its price, right? And as you can see, we mentioned they still kept interest rates ultra low, but because of this policy and with the Fed acting in the opposite direction, their currency was getting devalued very strongly. And so thus they had to intervene by buying the yen in the open market. So when they do that, you can see it basically created a turning point for the dollar yen. So the intervention had a major impact on the direction of the dollar yen. And despite the last quarter of 2022 where the Fed was still raising rates and Bank of Japan was still kept their interest rates at negative 0.1. But because of the intervention action carried out by Bank of Japan, the dollar yen actually started to pull back pretty significantly all the way till early January as well. So if you had caught the news of Japan, the Bank of Japan rather, sorry, intervening in the open market, you would have stopped and thought to yourself, okay, hang on, there's a big change in action by the Bank of Japan, right? They have intervened strongly in the open market, right, in the FX market, in the open FX market, and they have started to buy the yen aggressively to stem its devaluation and bring it back down to a level where they're probably more comfortable with. So in this scenario, you would have been looking to short the short dollar yen, right? So here in the first 10 months of 2022, you would have been looking to go long, generally most of the time, but of course, like I said, nothing goes up in a straight line. So this is where your technical analysis on a daily timeframe or H4 timeframe will help you identify various support and resistance levels. And then once you know what is the overarching theme, you will deploy your strategies accordingly. In the end of October, early November onwards, once BoJ had intervened, it was a signal, a turning point in the direction of this currency pair. So over here, you'd be looking to short dollar yen, but of course, like I said, even on the way down, nothing goes down the straight line, we have pullbacks as well. So this is where you can combine fundamental analysis with technical analysis, looking at what central banks are doing, and is there anything new or different that they've recently announced, and you can combine all these factors to at least determine what is the environment that we are in. Right, so this is the, as you can see over time as the, as time played out, the dollar yen from a high of 152 dropped to as low as about, yeah, the low, the high 120, so it's 128, around 128. So this is how we can use monetary policy action, keeping out an eye on news, and then mash it all up with technical analysis to give us the best outlook and also to give us a good problem to help us set up high probability trades be it long or short. Okay, so we've covered the major central banks, the calendars, what the Fed is doing, and also looking out for interventions. Right, so these are some of the key fundamental aspects to look out for. Okay, so let's see next would be. Okay, I think I will. Okay, so next we will look at economic data. Right, okay. So economic data is, there's a wide range of economic data. So what should we focus on. Right. Many things ranging from GDP to to employment report numbers and to inflation figures as well. Okay, so one of the key aspects of why the Fed is still continuing to raise interest rates is because the economy is still strong. And the labor market is still very tight. So what did it mean by a tight labor market it means unemployment rate is low, and total employment numbers are high. So when you have an environment where you have steady economic growth, and a very strong and robust labor market. The Fed can continue to raise interest rates. Right, even though they're already at 5% that the upper range is at 5% now, they will still, as you can see the CMB Fed watch tool, they're very likely to raise another 25 basis points next week, next week. So this is why it is important to be aware of the current level of economic activity in terms of GDP PMI surveys, and also the employment report, which tells us the unemployment rate and also the total non farm employment figures. Okay, so let's see how should I proceed with the next part. Okay, okay, before I just proceed and go into economic data is there anything you guys would like me to touch on, or just review what we've discussed. If not, I can just proceed to the next part of this webinar. Okay, so I think, right, okay, so far, no questions. Okay, so we'll just proceed on to the next part. So, GDP, okay, okay, there's been a lot of talk of recession right. So, let's just look at a couple of things. Okay, so let's just look at where the previous GDP. So, most of the economic data gets released on a monthly basis, right GDP is released every quarter but along the way, we have to advance estimate second estimate and third estimate. The third estimate is usually the last and final reading. For that particular period. Okay, I see a question by Raj. Okay, let me check with Desmond on this and see how I can, I'll feed this, I'll feedback this, this update, I'll feedback this detail to Desmond and I will try and sort this out for you guys. All right. Okay, so going back to GDP. Okay, so we, after, after a technical recession. In the first half of 2022, the US economy has actually bounced back strongly in the second half of last year. Right, and it's also chugging along quite well. This year as well. Okay, so we know the economy has bounced back at the end of second the second half of last year and after the banking crisis in March with signature signature bank SVB Silicon Valley bank. We have a recession talk again, but actually, if you actually, we have to look at the underlying economy and how it is actually doing. So, right now, the third and final estimate for the Q4 2022 the reading was 2.6%. But what's actually happening in the first quarter right. So if you look at our calendar. Look at our calendar so if you come to it, don't we have sorry. Okay, let me just change the date. So if we look at our calendar today, right 24th March. Here we have GDP and one GDP coming up as well. So this is actually the GDP data for the first quarter of 2023. Right. Okay, so they're expecting the initial estimate was 2% growth on a quarterly basis and as you can see the previous reading the fourth quarter reading of 2022 came in at 2.6%, which is what we see over here. Okay, but how do we know how can we get a better estimate of where the economy currently is. Okay, so another tool that's good to use is called the GDP. Now tools of your time GDP now space Atlanta space fed. Okay, this is Atlanta Fed is one of the regional banks are the governing body. Right. You have the main Federal Reserve and then you have all the various reserve. Bank says I mean banks from different regions of the US so if you type GDP now Atlanta Fed, what it, it will bring you to a website that actually gives you the estimate the running estimate for the current quarter right on the previous quarter. So what now we have moved on into the second quarter of 2023, which runs from April, May to June. And we're going to have the first estimate of the GDP data being announced on 27 April 1230pm UTC zero or GMT time. So if you go to the GDP now website, you're actually able to see what is the current estimate for the growth. So the growth is actually coming in at 2.5%. So this is actually higher than the initial estimate of 2% here, and it's not that far off from the fourth quarter figure. So this is actually telling us that the US economy is still growing pretty steadily, despite all the banking fiasco that happened in early March. Majority of it seems to be resolved, and the US economy is chugging along pretty well. So this data is updated on a weekly, every week so we can track this website and see exactly how well the US economy is actually going. So this is actually more gives you more timely update and is more frequent as well because you're able to see the updates every week. Okay, then another aspect. What is also another important figure is the employment report, right? So if we go back to here, we had employment reports for the US announced earlier this year. So 7th April, sorry, earlier in April this month. So we have non-farm employment change, which are your NFPs, non-farm payrolls, and you have your unemployment rate. So you click on the folder, go to latest release, it will bring you to the employment situation summary. Now naturally, we won't have time to read through all this, right? Well, what's important is always easy to understand data through charts. So let's just click on news release charts. And it will take you to this page where you have various data points. And here the first one is the unemployment rate. So the unemployment rate has been ranging between 3.4 and 3.7% for like almost over a year now. So as you can see, unemployment rate is low. So despite all the tech layoffs that we've been hearing about and seeing since the last quarter of last year and even start of this year, you can see it has not had a big impact on the unemployment rate. That could be related to a few things. One is that people who are getting laid off had probably could be a combination of getting hired again rather quickly. And also the tech industry as big and as powerful it is, it doesn't become a huge significant factor of the total U.S. employment, right? You're just looking at one sector out of many industries and sectors that make up the U.S. economy. So this is one way of seeing where the unemployment data rate is. And this is all on a monthly basis. And to look at non-fund payroll numbers. Okay, so you click on the filter, go to establishment survey data and click on employment by industry monthly changes. And click on go. Oh, wait, sorry, not this one. Where is it? Is it? Okay, I think it's employment by industry. Yes, sorry. Okay. So we want to look for establishment survey data and then look for the subtitle employment by industry. Okay, so this brings us to the page where we get the total non-fund figures, total private and also all the various sectors that we can see here. So naturally, after the pandemic lockdowns of 2020, employment numbers crash unemployment rate spiked, but then ever since then as economies reopened and people got back to work, whether work from home or physically in office. Non-fund payroll numbers have continued to rise pretty steadily and they've even surpassed the pre-COVID high. So what this tells us is the labor market is very strong and healthy. So that means the Fed can still continue to raise interest rates if they wish to do so. But obviously this is not the only factor that they look at and also look at PMI numbers, GDP figures and also of course the inflation rate. But this is one of the primary reasons why the Fed would still like to raise interest rates because there's no break in the labor market. It is still very tight and strong with low unemployment and high non-farm employment levels. So you can break it down into various industries as well. You can look at leisure, hospitality, financial activities, professional and business centers. Is there anything? No, there's nothing on tech. Okay, maybe it's probably under information. Most likely it could be under information as well. So yeah, so there's various industry sectors here that you can look at. Okay, now the other one that I would like to look at is PMI data and inflation. Actually, I have a very interesting chart here that actually shows us how the inflation, rising inflation was actually forecasted by the ISM report. Indirectly or inexplicitly it was forecasted. Okay, so if we go back here, sorry, oops. Okay, if you look at this chart, this is showing us the annualized CPI of the US versus the ISM prices average. Okay, so maybe just a quick view on what is ISM. So if we just look, okay, so ISM services PMI. Let's click on that and go to their latest release. Okay, so you have various sectors, the manufacturing sector services sector hospital is something relatively new which was created after COVID or during COVID. But the ones that we want to look out for will be the surveys or reports for manufacturing and services. So if we just quickly look at the charts, do you have the headline PMI reading together with the sub indices here. So if you can see a reading above 50 means that this sector is expanding and growing and reading before below 50 means this sector is contracting or slowing down. So throughout 2021 and the first half of 2022 the manufacturing sector was still expanding LB at a slower rate and finally towards the end of last year the manufacturing sector started contracting. And what we want to look out here is for the prices indices are every month the various readings that various sub indices are readings for the various sub indices are released. So if the prices indices actually tells us what is the inflation level in manufacturing manufacturing sector. Similarly, if we go to the services report, the services sector is still strong, although it had a month of contraction right at the end of last year it is actually rebounded pretty strongly. And the readings are still above 50 indicating that the services sector is still growing and it is actually driving overall economic growth in the US. And similarly you will have the prices sub index here as well, which tells you whether inflation in the services sector is increasing or decreasing. Okay, so by tracking this figures and we are able to see the historical performance or historical yeah historical performance between ISM prices and the CPI data. So let's just go back to our slides. Okay, so what we are looking at here. The blue line is CPI consumer price index. This is the headline CPI on an annualized basis why or why is year over year so annualized basis. So the blue line is annual CPI, which we know hit a high of 9.1% in around June middle of last year before it peak that has been moderating pretty significantly. But this is good because this is telling us that the fence actions of raising interest rates is having an effect on inflation. So when interest rates are high, your boring costs are high right whether you're in the manufacturing sector services sector you're a household or a business owner. When boring costs are high, you will tend not to expand or take on larger projects for example so that means demand is slowing down so when demand slows down. And your supply steady but we also had a bunch of supply chain problems due to the pandemic lockdowns but supply chains have also moderated and improved rather sorry supply chains have improved and together with falling demand. Overall inflation peaked in June of 2022 last year and has been moderating pretty significantly. But what is important here is to look at the red line. The red line here is telling us the average of the ISM prices sub index remember there was a survey or report for ISM manufacturing and another one for services. And in both of those reports there were several sub index indices right and one of the key the ones that I was looking at was prices. So when you take the average of those two sub indices, we get the red line as we see here and if you plot it in comparison with CPI, you can see that ISM prices over time generally leads CPI prices to the upside and also to the downside. So on the left side here is your your y axis for the CPI and the right side is your axis for the prices, which is at an index level, not a percentage is an index level whereas CPI is measured in percentage. But as you can see clearly over time, ISM prices has led CPI so what this means is when whether ISM prices moves up or down it is actually telling us that CPI is likely to follow suit. Similarly after the financial crisis in 08 ISM prices bottomed around the level around 30, around the 30 level is started rising CPI headline CPI bottomed at about negative 2% a few months after and then started rising sharply so you can see that. Back then in 2008 CPI ISM prices were really telling us inflation was going to rise and CPI followed suit. Similarly, in around 2014 ISM prices started to hit down first before CPI started falling so similarly you could see that inflation is falling here or ISM prices are falling. And this means that very likely that CPI will also fall. Similarly, you can see that happen over the years and it also is very obvious here in 2020 and 2021. After the pandemic lockdowns, demand fell so naturally prices fall and then as economies reopen and activities resume, manufacturing activities resume, services activities resume although at well they resume progressively right nothing. Everyone was taking baby steps to reopen at different, they're all reopening at various rates and stages. So as you can see here, ISM prices, the average started rising pretty sharply, at least two to three months ahead of the CPI reading. So based on this we could already tell that CPI is expected to rise right and if CPI is rising we have to look at what the Fed is thinking and what were they planning on doing. So if this if you see ISM prices rising and you also see CPI following suit, it means that the Fed is probably thinking about raising interest rates pretty soon. And then we have to look at what bond yields are doing right the benchmark bond yield is the 10 year bond yield. So if you can see us bond yields rising quickly. It also usually means that the dollar is going to be in strong demand. So, when the US 10 year bond yield rises the dollar index rises, generally this was a period where the dollar would outperform most of its peers right or rather or probably almost all of its peers and similarly, the ISM prices peaked. I would say in the second quarter of 2022. Well before CPI peaked and actually started heading down pretty sharply. And this was already telling us that CPI is about inflation overall inflation in the United States is about to follow suit is very likely going to follow suit. So this is also a period where we saw in the second half of 2022, especially third quarter onwards where US bond yield started to fall aggressively the dollar index also was falling aggressively. So this was a period where inflation was falling. And despite the Federal Reserve raising continuing to raise interest rates the dollar index was actually falling. And the dollar was losing its its strength versus all its peers. So this is how we try and predict inflation as well using ISM reports and looking at the prices sub index. So there was a bit of a scare in I think February where the prices index picked up. But the good thing was in the latest reading for the month of March it headed down back again, and also the latest CPI reading also continues to fall lower. So it does for now it does look that like inflation has peaked and should continue to head lower so looking at ISM prices index we are able to at least try and rely reliably forecast the direction of overall inflation. Okay, so let's just look at the dollar index right just to visualize visualize this over a chart or with a chart. So this was a period where inflation was rising. The US bond yields were rising right the 10 year bond yield was rising. And we also had naturally as you can see the dollar index rising as well. And then, as inflation peaked in although inflation peaked in June, it was still and started falling the dollar index was still rising. The bond yields were still rising. It was only here in this third quarter and fourth quarter at the start of fourth quarter of last year where the dollar index peaked started falling and bond yields also started falling. So despite the Federal Reserve, continuing to raise interest rates over this period, actually, all the moves in FX had actually reversed. So let's look at the Euro dollar. So okay, your dollar so when the dollar is strong, your dollar is going to fall so which is what was actually happening. And then in October, November is when there was a big change in the direction of bond yields and also in the dollar index when the dollar index started losing its value. All its counterparts will gain. So this is when the Euro had a big strong rally as well. And it also is reflected in the pound, the British pound as well. Right. So if you just look at dollar index. Together with okay, I'm just going to split the chart. So okay, stop chart is dollar index, bottom chart we're going to look for the US 10 year bond yield. So just type US 10 why you'll get United States 10 year government bond yield. So this is the benchmark yield. So we can. Okay, let's just put it on the weekly chart cause. Yes, sorry. Okay. Okay, it's easy to visualize the moves between the government bond yields and the dollar index on a weekly time chart so you can see the longer trends and you can also see the inflection points. So, as we've, as I've mentioned earlier, so October, November was the period where several things happened we had a BoJ intervention as well. And it was also one of the turning points where bond yields peaked right the US 10 year period peaked at about 4.3% or close to it. And then it has fallen to about 3.4% while the dollar index has been falling aggressive pretty sharply as well. So even though bond bond yields are relatively historically elevated, the dollar index continued to fall while the Federal Reserve was still raising rates and it, and it looks like next week they're going to raise continue to raise interest rates as well. So although this is this is why it's important to also look at what bond yields are doing and what the dollar index is doing because sometimes it can be a bit. We may not get the complete picture by just looking at monetary policy actions by off the central banks. So if you're just looking at what the Fed was doing at every FIMC meeting they were raising rates they're still, and they're still continuing to do so. And you just were looking at that singular data point, then actually you would have gotten your idea or your overview of the currency pretty wrong. Right, so despite Fed raising interest rates, bond yields started to fall, bond yields peak started to fall, dollar index also started to fall. Right, so this was something that you would have, you would need to pay attention to and follow what the benchmark 10 year bond yield is doing. Right, so the bond yield stays about 3.5% and continues to head lower despite the Federal Reserve raising interest rates, the dollar index could continue to fall further as well. So this is how we use fundamental data or how we perform fundamental analysis by looking at what central banks are doing. What are there any divergence between monetary policy actions between the various central banks. We also look at potential interventions that have taken place. I think we definitely can't predict any intervention by any central bank but it's important to take note when an intervention takes place and who has done it and why. And that's also important potential important turning points in the direction of the currency. We look at economic data, such as GDP growth, PMI numbers, unemployment numbers. Okay, the good thing about most of the economic data, it's a release on a monthly basis so you don't have to track it every day. You can track it on a monthly basis and form the longer term view of where the market is headed, where what sort of environment are we in. And then from there you're able to determine the right strategies for your trading. Okay, and let's see if I okay next key then. Okay. Okay, I'll just go back to the slides and we'll just talk about the US dollar index right and the composition so wise. Okay, just a quick history or dollar index okay so basically it was established in 1973 after the Bretton Woods agreement was dissolved. Basically, under Bretton Woods, the goal was the basis for the United States, and all the other currencies were packed to the value of the US dollar so basically, the Federal Reserve. To hold the value of gold to pack to form this foundation of a value of the US dollar and all the other countries were packed to the US dollar but then this agreement was dissolved and the base for the dollar index, the dollar index was established and the base was set at 100. So that is why you see dollar index ranging between, and it's highest 110, 115 to the low of maybe 90 or 80 so it's all referenced to the value of 100 which was established back in 1973. Okay, and the dollar index is consisted of, or made up of various currencies, which is the euro, the Japanese yen pounds sterling Canadian dollar Swedish corner, and I'm sorry this will be Swiss Frank. Sorry about that. Yeah, okay so the Swiss Frank. So, as you can see, the biggest component of the dollar index is the euro. So what this tells us is that if we see dollar index moving up very aggressively or falling very quickly. It means it's very likely that the euro will have the inverse performance right or the opposite performance. So that is why it's also important to note the relative performance of the dollar index together with more deals. So at least we are then able to establish the direction for the rest of the currency pairs, particularly the euro since the euro makes up almost 60% of the basket. It will be the currency that will have the most impact versus the rest of the currency or the rest of the components. Okay, so this is also quite important to know that if you're just going to trade euro dollar, you should be looking at the fact the ECB what they're doing in terms of monetary policy action. It will be important to know what the how bond yields the relevant bond yields are performing relative to each other. And then once we know how dollar index is performing rising or falling, it will have the most impact on the euro itself. This is about dollar index. So naturally, yeah, so if you switch this to right. So the dollar, the euro will have the tightest inverse correlation to the dollar index right to remember this euro is in the pad with the US dollar as the denominator. So if the dollar index is falling, that means this denominator is falling so hence the euro is going to rise and conversely the opposite will happen as we see here from June of 2021, all the way to October 2022, when the dollar index over a longer term period was rising very sharply and the euro was falling very strongly. Okay, so just to recap, before I, yeah, what is the highest leverage offered to treat us okay this depends on the on how tick mill has done it right okay so we won't be covering answering this question here today but before I would end the webinar, I would just like to do a quick recap again right so we've gone through the information resource where to get the relevant data so remember for X factory takes us gives us consolidates all the information for us across the various countries and central banks. And then from there we're able to go directly to the specific source and find out more details about that particular piece of economic data. Right and then we also have to, we know we have identified the central, which are the major central banks it's important to note the monetary policy actions taken by them. It's also important to note the meeting schedule, and also to look out for any interventions that have taken place. Then we look at economic data, right, these are not the only data points but I would say this are probably some of the ones that are probably a bit more important and you can start tracking these for as well GDP PMI's employment report inflation, and I've also talked about the dollar index and its components and the respective weightage so you can see how the rise and fall of the dollar index impacts other currencies, particularly the euro. Okay, okay there's a question by way where can we get the recording. I believe this yeah this recording will be put up on tick meals website as well. So I think just look out for any emails if you're mailing list look out, look out for the emails and also just look at their website as well and when will it be available, not to show but probably maybe by the second half of this week I guess at the earliest it should be available as well. All right. Okay. Okay, any questions or would you guys like me to revisit anything that was discussed today. Okay, guys. Okay, well if there's no further questions, then I would just end the webinar now and I hope this has been a good session for you guys. And yeah I look forward to presenting. I look forward to presenting the next session part two for you guys right so do look out for the date it'll be the information will be released soon, whether you have the mailing list or on the website itself right okay so do look out for the next available date and also the recording will be made available as well as well. Okay so most likely they should be done in the second half of this week I suppose right. All right. Thank you everyone. Have a good start to the trading week. Yeah, and yeah, all right. Yeah, good luck and I look forward to the next session right take care guys.