 Hi, my name's Leon Roe, currency trader and trading coach at Trading180.com. Welcome to this week's supply and demand forex and gold fundamental and technical analysis for the week starting the 17th of July 2022. At Trading180, we use really fundamental and resentiment analysis to determine our directional bias over the medium to long term and use supply and demand strategies like stop hunting and capture pain relief as well as what you're seeing in this video, what you will see in this video, which is daily supply and demand zones to really time our entries and really try and capitalize on potentially bargain exchange rates if you're new or warm welcome to you and if you're returning an equally warm welcome to you and we'll get into really the week ahead and what's potentially coming up and also some in-depth technical and more fundamental analysis. So I'll skip the summary and just really kind of go straight into the bit more of the details. So on the macroeconomic data front this week several indicators including the NAHB housing index, housing market index, housing starts building permits and existing home sales will provide an update on the housing sector at a time rising borrowing costs and prices weight on consumer affordability. Investors will also keep a close eye on the Philadelphia Fed manufacturing index, CB lending index and S&P global flash PMIs elsewhere in America. Canada's CPI figures are expected to show inflation continuing much higher, continuing too much higher with annual rates seen at 8.3%, which would be the highest since December 1982, 40 years. Other interesting data to follow include retail sales for Canada and mid month inflation rate for Mexico and Canada, Bank of Canada actually hiked 100 basis points, so 1% recently to try and stem inflation so they try and get ahead of the curve, but let's see how that works out. In Europe all eyes will be on Thursday's ECB monetary policy decision with the central bank highly expected to start raising rates for the first time in more than a decade. So market consensus is pointing to 25 basis point hike, although bets on a bigger 50 basis point hike increase have risen recently as the euro hovers around parity to the dollar and July's inflation rate is likely to be confirmed at a new record of 8.6% on Tuesday, matter of fact I'm just trying to strain my eyes I should have just zoomed in. Quality makers will remain unsure of a future rushing gas supply as flows through Nord Stream 1 will stay halted until July 21st when the key pipeline is set to finish seasonal work. So there is the rumour that Vladimir Putin may keep the gas supply switched off to Europe which would basically cause a massive energy crisis as if there wasn't one already and pushed the price of gas through the roof which would definitely hurt Europe. So the reason why we have reached the euro dollar parity is one of the reasons is because of the impending economic crisis that Europe is facing as well as the rest of the world. And so on the economic side, flash market PMI's for the eurozone, Germany and France are likely to point to a further slowdown across the manufacturing and services sectors at the start of quarter three and consumer confidence across the 19 block is seen at a 27 month low in the United Kingdom. Traders are heading for a busy week with main releases including inflation jobs report, retail trade, consumer morale and flash PMI's, Britain's consumer prices likely accelerated further by 9.2% in June and the record high and retail sales are seen falling for the second consecutive month. The unemployment rate is expected to hold at 3.8% and wage growth to pick up only slightly. So wage growth that adds to inflation worries as well. Central banks around the world are trying to get inflation down so they need to really monitor things like wage growth which if wages are growing it adds to rising inflation. There's a correlation there. So skipping to Japan, Bank of Japan will probably keep its ultra-loose monetary policy stance despite concerns over a week yen which holds at levels not seen in 24 years. The central bank will also release new quarterly forecasts, other important and that is that is actually important as well to look for their quarterly forecast central banks. Other important data to follow includes exports and imports inflation rate and flash PMI's. So that will tell you really the state of whether Japan's economy are in a surplus or a deficit and as well as what they're going to do with regards to monetary policy when it comes to inflation. In Australia I'll be meeting minutes I expected to provide more clarity on the central banks move for August with more investors now betting on a 75 basis point great hike following strong jobs figures in June. Westpac leading index and flash S&P global PMI's will also be in the spotlight and elsewhere it would be interesting to follow New Zealand inflation rate for quarter two exports and imports Malaysia exports and that's pretty much it that betrayed so lots pretty much going on this week which will kind of determine again the medium to long term bias and what really central banks are doing with rates what's happening with the economy and in the short term you know in typically days and sometimes weeks prices are driven by really liquidity because the banks are actually looking at exchange rate value in the medium to long term hence the you know the phrase buy the rumor sell the fact the rumors of you know depending on obviously the whether a central bank is hiking or cutting or whether an economy is getting stronger or weaker you know you'll see that play out over you know months not over you know days so you could have a period where you might have you know this week might you know be a bit of a down week for the dollar but overall the dollars should really be a buy do you know what I mean so you know any pullbacks should really be looked at as buying opportunities if you want to be a buyer of you know a certain currency now I'll tell you what my bias is on on each of the pairs that I'm analyzing as we get into the technicals and starting off on the dollar index and in fact go to the dollar index now right dollar index which is just a basic and measure of dollar strength against the major currencies like the euro the end the pound and I was expecting prices to kind of you know week or so ago to kind of maybe cool off a little bit but I think the dollar is again the best of the worst so regardless of you know the direction my bias was always to buy the dollar and I was hoping I could buy the dollar on a pullback right but it just looked like you know prices just keep going higher and higher so I think any pullbacks to you know the 107s more preferably probably like the 105s and using that as confidence when buying for example the the dollar yen or you know something like the pound dollar in shorting the pound dollar would be obviously something that you want to look towards and this actually technically is a demand zone as well because you've made higher highs there but for me it's not necessarily the strongest area of demand we're still quite in an expensive area but looking at the the dollar fundamentally we've got you know the odds are a recession uh within the next year a 50 percent survey shows and the probability of a downturn up sharply from 30 percent odds in June and growth estimates were cut while inflation projections rose so the odds are now close to even that the US economy will slip into a recession within the next year as persistent and rapid inflation emboldens the federal reserve to pursue a higher or larger interest rate hikes to answer the probability of a downturn over the next 12 months stands at 47.5 percent up sharply from 30 percent odds in June according to the latest Bloomberg monthly survey of economists in March those odds were just 20 percent the latest survey was conducted between July the 8th and the 14th for 34 economists responding about the chances of a recession so um you know all eyes are you know typically on the the the US economy but simply because obviously it's you know one of the world's largest economies you know apart from China but um when trading currencies you kind of have to look at the currencies that you're trading in relation to what is happening with the dollar so I tell you know for example the members um in the private members group um that I mentor why you know the the headline is is that the dollar was heading into a recession but who's going to be heading into a recession first right is that's the one that you want to sell and the one that is lagging for example the one that is least likely to head into a recession or the one that's going to head into a recession last is the one that you want to continue to buy so it's like the dog with the least fleas as was talked to me and I've always kind of kept that in you know my mind I say talk to me what was said to me you know by my mentor you know and great trader and friend Mark Chapman and so he always said who's the dog with the least fleas right so for me the dollar is the dog with least fleas and you know I've been saying that pretty much all year every single week from the beginning from last year I've been saying pretty much you know to you know my bias is to buy you know the dollar because the dollar is really the dog with the least fleas um regardless of what the headlines say and we'll get to Europe in in a sec but um but also as well the the US economy you know careens between glee and gloom with each data released so reports on jobs inflation and consumer demand are sending conflicting signals making it harder to see if a recession is coming so you know in the last report we've just seen that you know basically it's a 50-50 coin flip yeah up to 50% you know doesn't mean that it's coming into a recession it just means that um or is it 47.5% it just means that you know it literally is the flip of a coin that at this moment in time whether the US economy will enter a recession or may avoid a recession with all the data that you know is known so um this is obviously another interesting article so the economy is putting out very mixed vibes one day there's an indicator that points towards US recession the next day talk of the expansion's demise and dismissed as exaggerated after another stellar jobs report it's really ought to think of an economy where you add 2.5 million workers sorry and output goes down so federal federal reserve governor Christopher Waller on a July 7th webcast I don't know what kind of world does that so there are mixed signals but one thing I do know is that regardless of whether the US heads into a recession or not it looks like it's going to do it next year now there are currencies you know like the euro will get into that might that might actually head into a recession this year or sooner than the US so that's the reason why you're seeing um you know the uh the uh the euro dollar hit parity and probably go you know it looks like it looks likely that it might even go below that and if you go to my um youtube channel um and look at some of the videos in the videos tab I explain this in fact in this video here which was recorded again private members it's kind of like it's about a seven minute clip from a private members group from the 6th of July where I kind of um go over um you know why I was still uh buying the dollar or my bias was to buy the dollar um you know even if a recession is coming so and you'll see what happened from the 6th of July obviously until uh the dollar hit parity anyways um uh so for me going back to the technicals I think any pullbacks to zones that I want to be a buyer at um anywhere probably you know below the monthly moving fair value um is is what I really want to look at anyways moving on to the um dollar yen and the dollar yen keeps going higher and in fact it's the one three eights 140 is being touted as um a bit of an extreme where the bank of Japan may start to intervene and if it starts to get a bit hawkish then I'm going to be a buyer of the Japanese yen but for now if prices you know start to pull back on the dollar I think that's going to be you know decent areas to look for buy trades um on the dollar against the yen um yeah I think I think even the risk of environment um the dollar seems to be or it is also as well a risk of currency but I think the uh the the bank of Japan I think but I know the bank of Japan is looking at the 140 area as um you know it might have to start defending the the um the yen uh devaluation and really start to put a floor underneath that so um 140s are definitely uh to be watched carefully watched and um and so if it does start to um go above that then um I will start to probably start to initiate some sort of buy trades which um again I will probably want to wait for a trigger as well which will be some sort of hawkish statement from or indication from um any of the you know the central bank of the finance minister but buy trades for now still if prices pull back um and that's my you know my personal bias if you are looking to sell then I think you're going to have to wait for proof of value wait for prices to really prove that they're selling off and then look for any kind of pullbacks into any supply zones um the dollar swiss frank and the dollar swiss frank looking at where we are from a demand zone perspective as again my bias is not really um uh looking at this currency pair to be fair because you've got the swiss national bank hiking rates and you've also got the um the uh the dollar looking to high crates but the swiss national bank have really just started to high crates so they're early on their cycle whereas the but the dollar are typically or say typically but they're looking to um to actually maybe start to come to an end with their hiking cycle so as bullish as I am on the dollar I'm also aware that um after the next maybe you know from september october you might start to see um the dollar start to tail off there might be a cap to the upside so um but looking at where we are now I would probably say a bit of no man's land in terms of buying and selling if you're looking at buy trades on this currency pair from a daily supply and demand area you're looking at a pullback to that zone there if you're looking at any kind of sell trades then you're looking at either price to pull back up to the highs um and this isn't necessarily the freshest area of supply so I'm not really too keen on that that would have been the best area to look for any kind of sell trades um or you're looking for prices to pull back to prove that there's supply there and then a pullback into that zone before getting uh short um but I'm not really having really got a bias on that on that uh pair uh dollar CAD uh a bit similar in terms of um you know my bias I do think that once the dollar starts to weaken though um the the Canadian dollar could be a very nice buy against the actual um against the uh US dollar so I think for now for zooming out the nearest supply zone is probably going to be like a one from from the uh from the 20 from 2020 two years ago I don't know how significant that's really going to be to you know today's um um uh trading but um there are several bank analysis um that that think that the dollar in a risk of environment should want to continue you know going higher so um that's really where the plate is I'm not again I'm not a buyer of the uh the dollar against the CAD I think there's much better um uh currencies to buy the dollar against and CAD really isn't one of them I think CAD's probably one of the stronger uh currencies so I'm trying to avoid strength versus strength from looking at strength versus weakness um but from a risk off perspective you would expect the dollar to go higher again I would probably say to you if you want to get short wait for prices to really kind of prove that their supply and then a pullback into that zone would be you know preferable to really get short if you really want to buy the CAD the Canadian dollar against the US dollar um New Zealand dollar US dollar again um I was saying that the part last week and the week before that the part for these resistance is to the downside simply because you have a lot um uh risk off right and in a risk off environment um you tend to uh the commodity currencies don't tend to do well so you've got uh really some supply there and you've got supply here um in fact there and there so um from that perspective I think um any pullbacks are going to continue to be short in opportunities um just based off of you know the dollar being the stronger out of two and where money typically flows into in a risk off environment and it should want to you know for prices you know pull back to any of these zones I think you know they're those are really short in opportunities until um you know the the global economy fears on you know the global uh economic slowdown start to dissipate um then I think the New Zealand will be a buyer commodity currencies will be a buyer but for now I think against the dollar um you want to probably look to um buy the dollar against uh commodity currencies or certain commodity currencies anyway uh pound dollar so the pound dollar um still looking to get involved in this to the short side here where the supply zones are anything below that that monthly moving fair value I tend not to want to trade I think this is an expensive area but once it starts to come up to the 21 21 day which is basically the monthly period um moving fair value then that's where I want to look for uh trade because I'm not looking to trade in expensive areas where I'm looking to wait looking for you know bigger pullbacks before looking at getting short which would be represent you know fair value at the end of the day um so for me um my bias is still to the short side so looking at the uh the the the pound the pound actually had some decent monthly news so the UK GDP tops expectations with a 0.5 percent gain in May so the month for month um reading for GDP actually came out way more positive than expected so the UK economy grew 0.5 percent in May while manufacturing output and construction also expanded more quickly than expected Lizzie Burden reports um so yeah I mean there was some positive news for the for the pound but I do think overall when it comes to who is again the dog with the least fleas um out of the pound and for example the dollar um the pound is going to be the dog with the most fleas and so the um the UK you know UK families are nearly £9,000 worse off in compared to other current sorry countries a report says the British families are nearly £9,000 worse off than households in in comparable countries due to a toxic combination of low growth and inequality according to a new report a study published by the resolution foundation think tank and school of uh school of economics LSE estimates that the income of the typical low and middle earning family is is a third less or 8,800 pounds worse off than in comparable nations so um you know cost of living is going higher and even um you know we're earning less than um comparable economies right so um with inflation at you know these types of uh high levels record I wouldn't say record high but very high levels that we haven't seen in in in decades you can see you know where you know the UK really is is is is is struggling so I think that struggle will continue into the you know the third and fourth quarters of this year and we may even enter into a recession uh you know if not this year probably be the beginning of of next year technical recession anyway we've got two negative quarters um of course that could change but again we deal with probabilities and the likelihood of things happening and as long as you know we're buying the rumour uh that's really what you know where the money is made so I think that is the rumour uh still and so for me my bias is really to the short side if you're looking to buy the pound again it's very um very difficult to buy the pound at the moment you have to really look to maybe these 114 lows so we didn't see these lows until what again like two years ago so let's see what happens there that that was at the pandemic um again for me uh technically this is also another uh supply zone but again I probably want to see prices really pull back to the monthly moving fair value um uh prices before I look to get involved in a short on that uh euro dollar moving on to the euro dollar and um yeah you pretty much see seeing what's happened with the with the euro hitting parity and going below parity um this week and uh Europe's impending recession right leaves ECB in a deeper policy bind so the euro zones energy driven inflation may not ease by much and some economists don't see heights going far if economy shrinks so Europe is bracing for a recession that may do little to tame record inflation testing the metal of central bankers who are just days away from raising interest rates after a decade-long hiatus and the problem that the central European central bank has is that it doesn't want to hike it doesn't want to high-grades too much or it can't really high-grades too much because the economy might not support it and it might push the um or bring on a recession um uh quicker than expected because you know what you're doing is you're raising borrowing and lending costs which um are going to affect businesses um you know cheap money is what gets you out of a recession so um if you're heading into a recession but you're hiking rates um it's not very it's the opposite of helpful right the economy has to be able to support the the rate hikes um also as well uh yeah so that was actually i should have done this one first really but the the euro drops to um you know dollar parity for the first time in two decades so um we all know this this has been their headlines and but the it's the fundamentals that have been you know driving this um you know the the price over the medium to long term again if you go back and check really what i've been saying every single week is really you know short euro short euro i've been doing it saying it all pretty much a year is um is for me to uh my bias is to short the euro and you're seeing pretty much you know the reasons why um so i continue to want to short this euro so it's just pullbacks to uh you know supply zones daily supply zones which is basically where these these areas are and if prices can come back to these zones i wouldn't necessarily take this area here because it's below again them monthly moving fair value but um if there are setups you know just above that or if basically prices start to you know trail around here and then we get a move where the monthly moving fair value comes down to that zone then that will start to be a area that i might look to potentially buy but uh again my bias is to the downside if you're looking to buy again you'd have to really wait for proof of value wait for really price to kind of prove that there's strength there there's demand there then a pullback into that zone before looking at any kind of long trades um ozzie dollar ozzie dollar and um ozzie dollar again pretty much like the new zealand uh dollar you've got uh well pretty quite a wide zone um like commodity currencies are going to struggle against the us dollar at the moment i think but i think one of the uh buys when the dollars does start to weaken um i think um the australian dollar is going to be that one of those currencies so let's see what happens um is it due a you know bigger pullback possibly but um i i my bias personally would be for really just a pullback into any kind of supply zones before looking at um getting short anywhere around here but it's not really a pair i'm looking to trade anyway so i'm not going to spend too much time on that but from a risk off perspective um the money should flow into the us dollar um uh and let's see what happens there uh ozzie yen ozzie yen and my bias is to the upside and so um again you might think is that we just said you know that we're we're risk off uh you know you should really buy the japanese yen right and uh i think there is going to be a time to buy the japanese yen but the market you know seems to be kind of flirting between um uh what is traditionally considered uh safe haven uh assets and money flowing into safe haven assets and also as well um fundamentals right in terms of um you know where's where do i get the highest returns and i think one of the things you've got to watch for if you are looking to trade this currency pair is is really the the the dollar yen at 140 because i think if it starts to push above the 140s right uh then you may uh look for potential sell trades because you know there's going to be a potential trigger from the central bank not tolerating the 140s well that's basically the number it could blow through the 140s it could go to 141 142 nobody knows but um you know the the more the more devalued the yen gets is the more pressure it puts on the the bank of japan to do something about a devalued yen so if you start to see prices reach that 140 on the um on the dollar yen then you probably may want to you know take profit if you're going along on this and maybe start to potentially short the ozzy ozzy yen um um bias so buy the yen once the bank of japan looked to potentially intervene um so my bias for now is still long until you know we possibly i can't see us getting anywhere past this uh 96 area price can't see this 96 area and you're seeing again the the dollar yen uh maybe at the 140s plus then um then yeah i think it's time to potentially look for a short trade and gold gold has not been doing well at all in the short term um i do think though that this is um a definite buy in terms of if you're buying physical gold and silver this is basically cheap this is this is bargain prices really um and from a uh oh not that one where was i i think i had uh euro dollar exchange rate price okay it's this one right so gold set for the longest run of weekly losses since 2018 on the dollar right and commerce bank expects price to rise on recession prospects um and gold fell to below 1700 an ounce thursday for the first time this year so really the key is is recession right so um i think in the short term as the dollar starts to go higher and still appreciate it obviously affects you know gold or should affect gold because it's the dollar and gold are inversely correlated right so um this kind of you know reinforces that that idea and says while high inflation and growth threats typically aid gold the precious metal is wilting as investors weigh the prospects for bigger or more frequent interest rate hikes from the fed trying to curb price precious gold doesn't pay interest and like and like other dollar denominated commodities it suffers when the dollar rises still investors expectations of an economic recession in the u.s should benefit gold as a safe haven according to commerce bank analysts analysts so um again in the short term while the dollar is still you know pretty much king um it is affecting you know gold they can move in the same direction and they have done historically but i think with investors you know holding dollars uh while the fed is hiking rates um and getting a return on their dollars um even though it's you know being eaten up by inflation well eaten up by inflation and in fact it's you know real real rates are still negative um i think that this is just really just a nice buying opportunity especially when it comes to physical if you're not trading with any kind of leverage or anything like that if you're buying physical stuff then this is an absolute bargain i think and prices could go down to obviously below that but i do think if you think that in the next you know year that we should have a potential recession and dollar uh should should weaken right then you know you're thinking next year right so 2023 on the price chart is just basically here right 2023 this is going to be in mid 2023 so you could start to see in fact you know as we go into the next year prices of gold start to go higher so this is actually a very nice buying opportunity people tend to look at you know uh this in in the short term and think what's happening with gold in the short term but the smart money all the smart money have been looking to do is looking to buy in a few weeks ago maybe about three four weeks ago i showed you lot an article where central banks are buying gold there's no coincidence that they're not buying it they if they don't want to buy up here right for central banks they're not buying they don't want to buy expensive levels they want to buy for cheap because they understand that you know what's coming in six 12 18 months time or what's potentially coming in that time so this for me is an absolute bargain buying beyond just you know looking at a price chart you know in trading gold you know if you're a gold bug then just look at this as a nice buying opportunity not financial advice of course you know do what you want but yeah from a trading perspective i would probably say you've got really prices coming down to these types of lows which again that level's been touched several times so it's not necessarily the strongest area of demand but it could start to reverse from here or even just go below that right who knows but for me buying opportunities if you're looking to sell then you're looking for a pullback into either of these zones supply or you're looking at a pullback all the way up into the 18 14 1807s to look for a potential sell trade from there anyways that's pretty much it for this week i hope you have a great trading week and take care and speak to you all soon