 Hi, my name's Leon Roe, currency trader and trading coach at Trading180.com and welcome to this week's supply and demand forex and gold fundamental and technical analysis. If you're new, a very warm welcome to you. And if you're returning an equally warm welcome to you. And if you like the analysis that I provide every weekend, please don't forget to like, subscribe and share with your fellow colleagues. And if you're new, just a quick overview of how we approach the market at Trading180. And we apply fundamental analysis to establish directional bias and then apply technical analysis, supply and demand strategies to time entries, established profit and profit targets and risk management. So a bit different from some of the other weekly analysis videos you might watch on YouTube, Facebook, Instagram, etc. bit of a bit of an in depth analysis. So let's get into the weekly week ahead. I should say week ahead is what we're looking for is minutes from the last FOMC meeting is going to be coming out. So global services, PMIs, China inflation, that's going to be important and RBA, which is the Reserve Bank of Australia and the Reserve Bank of India saying that you trade the Indian currency, monetary policy decisions will be in the spotlight next week. So for the Australian dollar, the RBA will be looked at also as well. If the RBA, you know, hold rates as they're expected to do, then it shouldn't really be much movement. It's really about what the central banks say when it comes to forward policy, whether they're likely to, you know, reduce QE, increase QE, hike rates, hold rates, cut rates, etc. And that's what, you know, forward, I guess forward guidance is really about investors will also turn their attention to any negotiations between Democrats and Republicans over President Joe Biden's two trillion infrastructure plan and to COVID coronavirus figures, especially in Europe, where infections are rising and countries are tightening restrictions. We're going to be getting into a little bit of that when we talk about the euro markets in China, Germany and the UK and Australia will be closed for on Monday for holidays. So again, hope you're having a happy Easter. If you celebrate Easter, it's going to be a bank holiday over the Monday. And so just gives you a chance to kind of just relax and chill with your families. We don't necessarily always have to be in front of the charts and things like that. But if you are enjoying your time off and watching the video, then that's great. But I mean, I definitely use it as a time to, you know, chill and relax and then get back to trading on the Tuesday. So let's get into the the charts now and some some fundamental and resentiment analysis and starting off as we always do on the Dow Jones dollar index. And before we get into the Dow Jones dollar index, I just wanted to tell you that at the end of this video, I've got a bit of an extended video on this one. And it really I'm really going over some private mentoring, fundamental and risk sentiment analysis. And one of the things we use is the trading 180 spreadsheet. And what this does is it gives us the strongest versus the weakest currencies or weakest versus strongest currencies from a strength divergence and interest rate perspective. And not to get into it right now, right? Not to get into it right now. But you can get this some of this video, half of this video, I would say, because there are some trade secrets that the private members do have access to, which I can't really give you access to. But if you do want to get access to the full analysis and all of our trade videos, right, got pretty much daily videos that come out that I produce lots and lots and lots and lots of videos as you can see that you get access to from trade ideas, trade setups, fundamental and risk sentiment analysis, you get feedback on your charts as well and lots, lots, lots more live Q&A group calls. Then you can join the mentoring discord group in the next 15 days. It opens up on the 18th of April for a limited time only. I like to keep my groups small and really focus and give the attention to students rather than many other trading groups who just allow any and anybody in. I'm really trying to make you guys into traders know the way to do that. If you know about school, the bigger the class sizes and learning, traders can get left behind, right? If I keep my group small and concentrated, yeah, then we can focus on specific needs and where you are as traders. So it will be for a limited time only and that is coming out on the 18th of April, which is just over two weeks. Anyways, let's get into the dollar index and dollar index is just a measure of dollar strength against the major currencies like the Euro, the Yen, Australian dollar, the UK as well as British Pound and some others and as I've been saying pretty much, you know, over the past, well, since really January, I think January 28th, I was talking about buying the the pound, sorry, buying the US dollar for various fundamental reasons and recent fundamentals, you can see that the US jobs bonanza has much further to run, March experienced another huge jobs figure with and with people movement and activity picking up strongly through the second half of March. You have to pencil in a one million plus reading for April. It's not inconceivable that all the jobs lost during the pandemic are regained before year end. That's amazing, which if is the case would mean that the Federal Reserve rate hikes could come as soon as next year. So that's very, very bullish, very hawkish for the dollar if, of course, that data does support the narrative. You always have to have the data supporting the narrative, right? So really, you know, positive for the for the for the dollar and even more bullish for the for the for the dollar is going to be posing sees feds compelled to raise rates earlier than forecast. So again, a hiking rates is usually very bullish for the currency. So some of the smartest guys in the room, yeah, which is the former Bank of England policymaker Adam Posen says, and he thinks that the Federal Reserve will feel compelled to increase interest rates sooner than officials currently project, even with their new way and see approach to inflation. And just a quick quote says the Fed will have to raise rates in December 2022 January 2023 Posen said who's the president of the Peterson Institute for International Economics in Washington? In a media call on Thursday, they will feel they have to again, as long as the data supports this, but again, it's a by the room itself the fact, right? The reason why the dollar is increasing in value is because of this, the potential macroeconomics and monetary policy. When it comes to understanding the valuation of the dollar ahead of time, this is what fundamental analysis is really about. It's not about looking at the data on the day because it would have already been priced in. So you have to be ahead of the curve always try to be ahead of the curve. Anyways, dollar index again, if you do want to get long on the dollar, you wouldn't necessarily get long on the dollar index. But what you would do is wait for maybe some sort of confluence, right? Within those periods of bullishness, you can get pullbacks, deep pullbacks that can last for maybe a week or two doesn't mean that you're, you know, the dollars all of a sudden turn bearish if you're looking at price action only, then, you know, you can't really understand the narrative and what's going on behind the scenes. Of course, in order for prices to go higher, you need enough liquidity and what liquidity is is enough sell orders. Yeah, and if you don't have everyone's bullish, right? And for example, buy orders, yeah, you need enough sell orders to facilitate buying. Yeah, and if you haven't got enough sell orders, if it's not enough liquidity enough sell orders above the market, then the market has to look for sell orders and where those sell orders going to be below the market. Yeah, this is what stop hunting and liquidity hunting is all about is because it facilitates more buying and if there's not enough liquidity above the market, then the market has to come down. Yeah, to look for the sell orders wherever they are so that the buying can take place also as well at the same time it draws in traders who follow price who get short and if you're trade, if you're placing new orders, yeah, this is all supply and demand in balances and supply and demand. Yeah, if traders who are selling, yeah, who's taking the other side of your trade? Who's doing the buying? Yeah, again, it's the financial institutions who know so what they do is they can manipulate the market to the downside, not only stop hunt but draw new traders into going short while they take the other side of their positions. Yeah, and that can last for days, weeks, even months because they got a longer term view on where they think prices should be if somewhere up here 94, 95, 96 and it allows them to buy, yeah, for cheaper. Yeah, it allows them to buy the dollar for cheap. Nobody wants to necessarily buy an expensive area. It's just because we might be bullish on a currency pair. It doesn't mean that this week, you know, the prices are going to go to the upside. Yeah, so there is, you know, a wait and see approach. There's opportunities. The reason why we select certain levels and we don't trade others if they haven't proved that there is demand at those areas. Yeah, so anyway, just a quick lesson in in liquidity and understanding how the market moves. It's not about, you know, price action and because price is always manipulated so you can't rely on price but what isn't manipulated is long term value and fundamental analysis. So that being said, buy trades if you are bullish on the dollar, if you think that, you know, you might want to take advantage of maybe some dollar weakness. Again, you'd have to probably see some sort of catalyst for that. You can also obviously look for sell trades and again, you wouldn't necessarily be looking at dollar, the dollar index, but you would look for confluences on this and then go to a dollar cross like the yet dollar yen, dollar Swiss, dollar CAD for example and then and then look for, you know, either supply or demand zones that correlate with with maybe the overall dollar potential strength. So for me, for the foreseeable future, it is dollar longs continuing and the bigger the pullback, the better the price we can get in when it comes to value moving on to the dollar yen and dollar yen again. We've just seen dollar strength and really looking for a pullback, hoping for some sort of pullback into a demand zone. The yen doesn't really do well in a risk on environment, but in a risk off environment where there's fair uncertainty and traders would like to place their money into potential safe haven. Then the Japanese yen is the currency to get into. But until really you start to see maybe even the stock market setting off to confirm this kind of risk off environment, if you don't see, you know, the gold start to move higher, stocks start to move lower than any kind of pullbacks, probably just a pullback, you know, some sort of profit taking for another move higher. But again, you'd have to really understand what's going on in the market from a fear and uncertainty perspective in order for you to really want to get short on this just because even if there isn't uncertainty and fear and prices may pull back, doesn't mean that that is the direction to trade. Just means that there's just profit taking going on from this move to the upside. That's all that is. So, you know, you really want to look for the smarter trade rather than just looking at, you know, general waves and stuff like that. That doesn't really do anything for you in a long term. You might make some money on this trade, but in the long term, that's not really a strategy to use. Otherwise, if it was, a lot of people would be making a lot more profit than they do. And this is not really hard to kind of figure out where the waves are, but there's a reason why it doesn't, you know, traders don't really make money in the long term. And it's because a lot of traders anyway, the vast majority of them is because they don't understand what really is moving price in the medium to long term. Anyways, looking for pullbacks into, you know, some demand zones and as long as the fundamentals, you know, for the dollar is still strong, then that is going to be a really nice area to look for buy trades. Moving on to the Dollar Swiss. Dollar Swiss has reacted from a supply zone that came from maybe July 2020. Again, very similar to the dollar, to the dollar yen, where I'm not really looking to be a buyer of the Swiss franc. There is a bit of a demand zone up here, but unless we're really at the highs, right? If you look at where this move is, you're buying at the highs and while they might be an opportunity to look for, you know, lower time frame entries. So for example, prices do come back down to here. This could be a decent, decent area to look for a buy. Just look, just understand that from the overall bigger picture perspective, higher time frame perspective, just be careful that you are buying at, you know, potential highs. So if you are looking to get in there, one of the things that you can do is maybe just reduce your position size, what you would normally take. I personally would really like prices to come down to this zone. This maybe is 93 area and that would be really, really nice for me to get in a long, even better still if it came down to the 91 area. There could be a potential, you know, sell, again, profit taking, who knows, but you'd have to really believe that the Swiss franc is a bargain at this 94 price or that the dollar is expensive at this area for you to really want to get short. Moving on to the dollar CAD. The dollar CAD, you've got two kind of, you know, strong currencies going at each other. So when you get two stronger currencies, you tend to get price action that looks like this sideways. In the recent past, you have had the Canadian dollar has been, you know, quite strong. You can pretty much see, you know, the downtrend. If I was looking to buy the dollar against the currency pair, it probably wouldn't be against the Canadian dollar because you've got really two strong currencies competing against each other and really what you want to see is divergence is a strong versus a weak currency before looking at getting long or short because that's what produces trends. Anyways, there is actually a zone that is very, very interested in testing technically. Yeah. And it's the, this actually wouldn't necessarily draw that. It's this zone here. Right. It's that zone right there. It's 1.2446 area down to the 1, 2, 3, 6, 5, 2 area. Very interesting for a potential long. If I was looking to buy the dollar, it would be down here, but I'm not really focused on this pair to be fair. But if you are, then probably say the best area to look for any kind of short trades, premium area would be actually around this 1, 2, 9, 1, 2, 950 before looking at getting short more of a longer term trade or if I was looking to get, and that's long on the Canadian dollar, but if you're looking to get long on the US dollar, then I think this zone here is really, really nice for a buy trade technically. Moving on to the New Zealand dollar, US dollar, and we did see a bit of a sell-off over the last couple of weeks, but the New Zealand dollar has found some bit of stabilization at this price around this 70 cent to 69, 43 area. And again, I think the New Zealand dollar is actually quite decent or potentially could be, I think even though there was talks of potential double-dip recession, the latest GDP figures came out as being negative. I do think that might be short-lived and it might lead to a New Zealand strength when they get the positive data, but again, is the New Zealand dollar a buy? Is it best against the US dollar? And the answer for me is not really. So when it comes to this pair, you can need to be a buyer if prices pull back or you can be a seller here, but overall from a strength divergence perspective, it doesn't really, really interest me at all. I think this area though up top, if it does get up here is really, really nice for a short trade, but that would be obviously looking to buy the, sorry, buy the US dollar against the New Zealand dollar at this price, which I think actually wouldn't be a bad shout if prices can get up there and the fundamentals remain strong for the US dollar. Moving on to pound dollar. The pound dollar as weakened over the past couple of weeks a little bit, we did have, we've had since really last year, massive move up, but now with dollar strength coming into the market, you know, you pretty much may see, you know, more of a ranging accumulating sideways type market. So the pound and there's a fundamental analysis on the pound. It says Blue Bay's pound U-turn signals UK post-Brexit pain starts now. So firm reopen bets against sterling in March says CIO Dowding and Brexit fears fading. Vaccine euphoria are weighing on the currency. So the risk to the pounds 2021 recovery may be becoming too numerous to bear as Britain's currency looks poised to end a five month winning streak, five month winning streak. Everything from waning euphoria over the nations of vaccine rollout program to renew worries about the state of the post-Brexit economy and the squeeze on public finances are taking the wind out of the rally that has made sterling the biggest gain of this year among the G10 currencies after the Canadian dollar. It's slipped more than 1% in March. So far on contract it interrupts an advance since September that drove it to its strongest level in almost three years and just quickly just this this last quote I guess is too much optimism may be in the price says London based Mark Dowding who is this month reopened bets against the pound at Blue Bay asset management LLP where he oversees 70 billion right. So these guys when they looking at short trades they're not looking to take by the way just one or two trades they're looking to scale in they have to break up their orders into iceberg orders and things like that. So they're managing 70 billion and this guy is talking about going on record saying that they're opening up short positions then that's a possibility right. So the lockdown in the UK remains more restrictive than else than elsewhere putting the shackles on growth. Not sure about that but yeah I think the the pound everyone's going to have opinions on the pound I think overall if you're comparing the pound versus maybe the dollar they're probably maybe some weakness but the pound against for example some something like the Swiss Frank or Europe. I'm not too sure about that at all but maybe just they're just talking about the maybe the pound against the dollar or maybe pound against the cat right. But the pound for me is a bit of a mixed bag. I think I do think that again the highs if prices can come up to this high for this one for one area one for two I really think that is is a really nice short trade. So the higher prices go I do like this and if it can come to the underside of this level at least and the pound starts jumping I do I probably will look for any you know some some sort of short trade in this area from a buy trade perspective again any kind of pull backs probably into this fresher area of demand before looking at getting long on this currency pair if you think that the British pound is a bargain at these prices against the US dollar moving on to the euro dollar and the euro dollar continues to sell off and I'm actually out of this trade I've got out around here somewhere in that area and prices are kind of pulled back to that you know going further down pull back to that supply zone and potential for more selling but again for me I think my preference would probably be more in and around this area here if you can put up to this 19 1.19 area I think that's a better sell then pretty much here doesn't mean that you know you can't get short here of course intraday wise depending on your time frame if you've got enough downside potential then that is still a decent short depending on the time frame that you might trade so Europe again going through some potential problems so euro zones crunch quarter for crisis recovery is starting so destiny of economy hinges on sudden vaccination scale up so forecasters are converging more towards partial recovery and Europe's stuttering efforts to overcome the coronavirus crisis they finally be about to reach a turning point after a troubled start to its vaccination drive progress is ramping up on inoculations in the second quarter and will determine whether the euro area can finally shake off the worst economic turmoil in living memory or languish further behind its peers so Europe the reason the main reason why if you watching my videos for any you know period of time you'll notice that there's been a divergence between the u.s. and the and Europe and the euro zone based off of things like vaccine rollouts GDP growth jobs etc. so what's happened is is obviously the dollar has gotten stronger that's 80 pounds sorry I meant to say the dollar the u.s. and the and Europe but yeah so the u.s. is you know stronger of the two when it comes to the fundamental analysis and this is the reason why you're seeing you know this move to the downside of a pullback then a move to the downside again because the market is is valuing the exchange rate of the euro dollar based off of dollar strength and euro weakness and your weakness is being caused by the poor vaccine rollout continued lockdowns etc. that's going on in France and Germany so if you think that's going to continue then you're looking for short trades if that zone doesn't work out then you're just looking for a pullback into another zone to look for short trades right because again as I explained on the dollar if everyone's going short then where is the liquidity liquidity is to the upside so that would mean that if everyone wants to get short their stop loss is what a buy which means that that would be more liquidity yeah if there's not enough buy orders below the market it will search for the liquidity above the market yeah and then it allows for the institutions take the other side of that and they can sell yeah and accumulate more sell orders as stop losses are being triggered and also as well the market moving higher with drawing more buying which then would allow the smart money to take the other side of those trades and look for sell trades obviously and then they can get and they can short the other dollar from a better price and they can buy dollars at a cheaper cheaper price basically that's pretty much how it works so again understanding the path of lease resistance is to the downside still until the euro for me until the euro does start to prove that there is an economic you know some sort of economic recovery lockdowns are few and far between and you know the economy is getting back on track then for me the the path of this resistance is to the downside short trades moving on to the euro yen and the euro yen as bad as Europe might be seems like the yen is in a worse position really nice buy trade a couple of weeks ago at this level I wasn't really interested in this currency pair though we have made higher highs and higher lows so if you do want to get along on this currency pair on a pullback that would be the first area to look for if you do see some risk off sentiment again come into the market then this is a really nice location to look for some short trades right there but again really you want to see the catalyst you have to understand why the Japanese yen or why money is going to pile into the yen at this price point or will money continue to flow into euros for the long term fundamentally it's not a great pair so I won't really stay too long on that Australian dollar US dollar again to quite strong currencies when it comes to fundamental analysis pretty much what you're seeing down here is the result of that you have had a level that's been touched once twice looks like a bit of a liquidity hunt below the market here I'm personally I'm not really trading this pair again because it's not really much of a divergence or even a convergence when it comes to the fundamentals so it's harder to read so for me I'm going to stay out but if you do want to get long on this then this is a decent area to look for long trades short trades at that supply zone there or even better yet if you want to get short here and buy the dollar against the Australian dollar I think that is a really nice area to look for some short trades if you're looking to trade this currency pair anything below this area down into the 75 round number I think is quite nice as well a nice fresh area of demand moving on to the Australian dollar Japanese yen and managed to get into a trade around here a couple of weeks ago took some profit in fact along the way and ended up getting into another trade down here we went over this in the in some of the private members group really really nice trade that we entered in into and yes so currently in in profit on that one and let's see what happens and the reason why we went we were going long why I was going long in particular was because the Australian dollar in a risk on environment yeah does well yeah in a risk off environment then it's the Japanese yen that should want to strengthen but for now with a risk on the environment it's just literally pullbacks so that we can get long if it pulls back again here then I'll just look continue to look for long trades as long as the risk sentiment of fundamentals supported because we've got a lot more upside potential than downside anyways if you are looking for short trades on the yen then I think just above this level here it's going to be really nice so to the underside of this level here I think is going to be very very nice for a short trade and yeah technically I do like it and just above that as well but let's see what happens and going into gold so gold has bounced off of a nice demand zone right here from from last week nice fresh area but fundamentally gold is again a bit of a hard read is taken a bit of a battering one of the main reasons is I guess I said this over the past a few weeks matter of fact maybe month or so is that gold doesn't pay a yield and although it's a safe haven asset alongside bonds because you got the 10 year treasury bond yields are going higher money is flowing again probably out of gold and into another safe haven asset that does pay a yield yeah so this article is talking about you know gold getting that inflation feeling again the prospects of higher interest rates is bad news for the ultimate shiny yellow zero coupon long duration asset and what this is basically just just go I'm talking about is that if the US dollar is raising interest rates meaning that if you hold interest rates you're getting higher a higher yield right then again money's probably going to flow out of gold into dollars right because they kind of work they can work inversely now when is there a time to actually buy gold it's really when I would say inflation is seen as getting out of hand so there are obviously different schools of thought with all the money printing that has been going on over the past year you know that should push inflation really really well it's really high but it's definitely go above the 2% right until that start that idea really starts to take shape and money kind of flow back into gold for me gold is really a harder read for now not to say that it won't be you know in the in the near future or maybe you know a few months from now but until really inflation is seen is really getting out of hand and maybe the US economy overheating etc I think that gold may be a it's not really an asset that I'm looking to you know buy at the moment I've definitely will never you know short gold for me anyways just it's definitely more of a buy but if you do want to get short gold and potentially take advantage of some you know money going out of gold and into other assets then there is your you know your short trade right here if there are inflation worries yeah for reading other articles and you know there are definitely are then potentially this is really you know the the ultimate you know buy and we've kind of bottomed out so let's see what actually happens with gold but for me it's not necessarily the clearest fundamentally I don't love gold fundamentally or silver at the moment so personally I'm not really looking to trade this but if you are there was a really nice opportunity obviously on that must have been like the Wednesday Thursday Friday yes the Wednesday would have been a really nice time to look for some buying of gold really nice trade there technically but if you are looking for a short trade either there or if prices can actually even get up to the 17 90 18 100 area that is a decent short as long as as well the dollar continues to you know gain in strength and positive sentiment around the dollar positive you know the then that's going to really kind of way on gold prices and cap gold prices going higher unfortunately for the gold bugs for now but doesn't mean that you know prices won't go higher in the in the future again if inflation starts to get out of control so that brings me to the end of this week's analysis if again please don't forget to like subscribe this far you're in for a bit of a treat because I do have some analysis again this is private members analysis and this is what I do for the private members every week you'll get about half of this video and just it's just a bit of a taster of of the analysis that we do and again if you do want to join trading 180 you can do so within the next 14 days look out for for the opening and again it will be for very limited time maybe a few days I haven't decided so make sure if you do want to were get involved then give you a part of the community and the group and understand really the complexities of fundamental analysis in the most simple way definitely take advantage of that anyways guys take care and watch the next video and I'll speak to you until the next video good morning all so welcome to this week's fundamental and risk sentiment analysis video and yeah so we're just going to get into it this is the fundamental analysis spreadsheet and we're going to go through pretty much to set the tab so what we're going to look for in on this tab is really just understanding that the bigger picture and understanding whether we're in a risk on or risk off environment it looks like we're in a risk on environment overall global recovery vaccine rollout etc but obviously there are some some other things that are going on as well but generally we're in a risk on environment and really the way to kind of look at risk on is and risk off is really in terms of scale so just kind of understand it's not necessarily a binary you know switch or anything like that it literally is just understanding if that is you know more neutral and this is sorry bit of a scale where this is maybe extreme on and this is extreme off if you look at you know the corona virus last year that would been extreme you know off right so off means risk off is when there's a lot of fear uncertainty in the market that is extreme off and when there's pretty much no fear uncertainty and traders are looking to you know put some risk more on the table for a yield yeah and maybe take a you know that it sounds a bit funny but you know stock markets are considered a risk asset right so you're taking risks by putting your money in the stock market so you know anything with with with that that presents a higher yield presents present potentially our risk assets so from a scale of one to ten if this was a scale for example we're definitely on this side of the of the risk on and risk off scale so and again it's more subjective to each individual but we're definitely more risk on than risk off so with that being said we should see what we've been seeing for the past you know three four months if you've literally just been trading Aussie the New Zealand the CAD you know you've seen this happen and against the divergences of the safe haven currencies Swiss the Yen not so much the dollar the dollar can act as a risk on and off currency but definitely with the Swiss in the Yen you've seen that go down I've been saying this since I think you know the last four five months or so is you know these are the pairs that you really want to look for as your base pairs so Aussie buying the Aussie buying the New Zealand buying the Canadian dollar and selling the Swiss Frank and selling the Japanese Yen so then your pairs are literally chosen for you based off just the bigger picture right so Aussie Swiss Aussie Yen a buyers New Zealand Swiss New Zealand Yen our buyers and CAD Swiss CAD Yen and you can pretty much see if you were just literally taken that advice that I've been giving for the past and again not financial advice of course not financial advice but you've done your own research and come to the same conclusion as me which is basically what I want to say is is that's pretty much you'll see the what those pairs have really been doing yeah so this is where money typically flows into and out of so again equity stocks gold on the other hand slightly it's slightly different generally in a risk on the environment because gold doesn't pay a yield it typically does go down what we have to also take into consideration because it's not again fundamentals aren't just a binary thing there's lots of moving parts right we also have to take into consideration what the dollar is doing and also as well inflation so inflation starts to get out of hand or is seen as potentially getting out of hand in the future then gold and silver are hedges against inflation so you can in fact have a situation where the US dollar may be rising because of interest rate hikes but also as well there's going to be a lot of people in gold and silver who consider that maybe you know within the next year or two or three prices may rise above their 2% inflation target and if it does this is obviously inflation is purchasing power the higher inflation goes if they say for example it's because four or five the less you know the weaker your currency is purchasing power and things cost more and therefore the price of gold should act as a hedge against inflation and the price of gold should increase so while you have potential rate hikes going on in the US yeah due to the fed's average inflation target if average inflation is above 2% and they need to contain it and rate hikes are generally good for say good but they increase the valuation and appreciate the valuation of a currency or they can do in comparison to another current currency that's not doing the same thing gold can still rise in that situation as well if inflation is seen as going higher then you know or getting out of control so again it's not this is the thing that traders tend to struggle with but if you understand you have to look at each individual asset class individually yes they are there are correlations that you should be definitely aware of but you must be aware of the little details as well it's kind of like being lazy if you just if you're just saying all right then well US dollar up gold down that doesn't make any sense yeah there's reasons why many other factors why gold may go up or even a dollar may go down etc so don't always just look at it like that and obviously I'm here to help in the group so you know this is this is why you know we do the I do the mentoring to get you to you know really kind of think and see these types of these moves and what is likely to happen in in the future again we're not 100% you know were forecasters as far as you know don't get it 100% right you know it's just a timing issue but generally you know we can see the bigger picture nowhere prices are going you know in the future and then just kind of ride those there's major trends anyways from from that perspective obviously we have our local and global risk events global risk events nothing really in the papers at the moment we have some local risk events obviously there are there is coronavirus local coronavirus haven't put it on the on this chart but there is local coronavirus problems it's a global thing but it's also a local thing because you can see the divergence between what's happening in Europe and for example the US in the UK so with that being said it's just being aware overall what's going on yes we're in a risk on environment but then there are um the local risk events that can see in the country in a country's currency um which may make it either go to the upside or to the downside appreciate or depreciate um looking at the pairs for this week so again just looking at strength divergence and understanding where we are from a strength divergence perspective um we've got uh strength divergence in case you don't know this is obviously this yes updated automatically for my economics data tab is looking at the strongest divergence is now again you have to be aware that yes you know one two and three's are generally generally seen as appreciating currencies and six sevens and eights yeah are seen as depreciating currencies based off of you know the macroeconomic data that we use now um currencies will move in waves right in a cycle all current is moving in a cycle right and the idea generally is to trade divergences so the biggest divergences would be one versus eight because you're expecting one to keep appreciating or could potentially appreciate and eight to be you know down here so what you should see is generally a trending market right so you want to buy one and sell eight but as we know there are not only are there or currency divergent trades there's currency convergence trades and the reason why they're a currency convergence trades is because an expensive currency in fact has a detrimental one can have a detrimental effect on GDP yeah so GDP grows domestic products now why is that important because if your exports are expensive yeah if you've got an expensive currency which is number one you export it affects exports a cheap currency or a devalued currency as long as the quality of goods is obviously up to par a devalued currency actually boosts exports and an expensive currency can hurt exports so what tends to happen is central banks don't like an expensive currency and the economy doesn't like an expensive can not like an expensive currency or too expensive because global trade will go elsewhere the reason why China is you know the they they're exchange rate you know and they manufacture you know the world's pretty much goods right because they their their currency is very very very you know cheap and depreciated and in fact all central banks want a devalued currency because what is inflation at the end of the day 2% inflation means you know that the currency is being devalued 2% every single you know year so an appreciating currency yeah which is which kind of tends to is which is what is known as deflation is is a problem and inflation is good as long as you know you reach a 2% target now there are moments where you can have convergence trades right so where a devalued currency will boost exports in fact and then and then and then that will have the effects of boosting GDP because it boost the trade balance right or it can help to boost exports yeah so if exports are being boosted right because international trade is is buying from a from a devalued currency and a cheaper currency it boosts what that country can sell and helps GDP whereas with an expensive currency who wants to go and buy goods you know from a country where it's expensive you don't do it in real life yeah and businesses don't do it in real life in global trade they'd rather go to a country that has a devalued currency or a cheap exchange rate and buy from there then go to you know a country where the the the goods or services they're providing is expensive providing that obviously one versus eight is providing the same you know the same goods and services obviously you know gold isn't produced everywhere for example oil isn't produced everywhere so sometimes you have no choice but if they're you know in global trade if I want to do some global trade I'm looking for a place to buy am I going to go with the expensive exchange rate or am I going to go with the cheaper exchange rate obviously the cheaper and it's not just me everybody will look to do the same thing and then that boosts exports therefore boosting potentially GDP and then GDP is on the rise you know we got a recovery expansion boom phase and that should have an effect on the the the the the currency that's the way it works anyways you know one two and three so two and three for example can it can you know have an effect as far as you know could get weaker because central banks may enact policies to try to weaken the currency they don't want an expensive currency and in fact the central bank with a depreciated currency could do enact central bank policies monetary policy to actually strengthen a weaker currency for example that's the reason why you will have if you're in this game long enough you will have you will start to see countries and currencies go from being very very strong to very very weak to very very strong to very very weak it happens over a certain amount of time and we have to be aware of these you know medium to long term trends and then on the short term we can take advantage and literally is trading one direction for you know months and months and years and years so that's pretty much what we need to be aware of so it's not just good enough to say okay well you know one versus eight I'm going to you know buy the pound you know and then sorry sell the pound and buy the Australian dollar you know you have to do a bit more research which we'll get into we will get into a bit later on we'll go into the macros but just as a general overview continuing from last week as we know nothing's really changed I did say that this wasn't a pair that I was looking to trade and it wasn't really one on my list because of the pound being you know having really strong sentiment I think it was on the on the on the on the cycle you know it was eight yes from a from a data perspective but it's on the up and up whereas the the Australian dollar which is number one again is still probably looking to go a bit higher so in in that case you've got two currencies that are similar potentially sentiment right so for me that isn't a trade that's not a trade what you want to do is I've a trade currency that's diverging continue to get strong versus currencies continue to get weak or you want to trade currency a strong currency that potentially may get weaker and a weak currency that also a weak but a depreciated currency that is potentially may get stronger due to obviously the data so it's converging and diverging trades if you're seeing two trades or two currencies and countries heading in the same direction those are not trades that I want to take advantage of anyways going through this quickly these are now again I'll go through these these these trades on the fundamental side in a sec say in a sec but after we've gone through you know the economic data and the overview for me pound New Zealand is is not a trade again both quite strong Euro was he is a trade for me is a pair pound dollar is not a pair for me that I'm looking to trade Euro New Zealand I will look to probably look to start trading that again I think the New Zealand dollar has had a bit of a negative actually I'll put it on the list as a maybe it's a maybe I've got to do a bit more research on that one I think the New Zealand dollar it did go into some negative GDP but I do think that it's still ahead of the of the your Euro of Europe but there are better there are easier trades that are out there so I'm going to put it as maybe and maybe Aussie Swiss of course Euro dollar of course this divergence is there New Zealand Swiss again I'll put it on the list pound CAD not on my list dollar Swiss on my list I've been waiting to get into that for ages Aussie Yen I mean that took few trades on that recently been quite profitable pound Yen that is on the list just seeing that New Zealand Yen I think last last week I did say that was on the list so I will kind of put that on there again I do think if the New Zealand dollar you know does start to have some good news then that should be a decent buy Aussie CAD definitely not too commodity currencies Euro CAD that is on the list any pullbacks dollar Yen that is on the list buy New Zealand CAD that's not Euro Yen not really interested in that pound Swiss interested in that to the upside dollar CAD not interested in that CAD Swiss obviously interested in that because they're diametrically opposed let me just clear the charts put that there and then we go down a little bit what else is there so CAD Swiss so Swiss Yen not anything I'm interested in Aussie dollar not interested Euro pound I was interested in the pound versus the Euro I think it's definitely it's going to be on my list Aussie New Zealand not too interested in that even though I think the Aussie is probably going to get stronger against New Zealand and I think that's pulled back a little bit but there are easy trades out there Euro Swiss I'm no longer really interested in this even though I do think the Euro should go higher against the Swiss and in the medium to long term CAD Yen yep and New Zealand dollar I'm out of that short trade from a couple of weeks ago a week or two ago took profit to the short side and yeah that's pretty much it so even though again we've got divergences and sometimes the strength divergences aren't necessarily fantastic let's say for example CAD Yen you might think to yourself well you know that there's there pretty much even on the on the from a based on a quote currency perspective from a data perspective but if you have actually have a look at interest rates the deciding factor really in a risk on environment is commodity currency and again in a risk on environment traders looking for what and looking for a yield yeah just by holding the Canadian dollar you get in 2.0.25% and in fact holding the Japanese yen you're going to have to pay to hold the Japanese yen it's minus or negative 0.1 so there's a big divergence right there yeah so until monetary policy changes or anything like that the CAD Yen as much as the divergence isn't you know fantastic what you do have to understand is that there are divergences in monetary policy in interest rates in inflation etc so again it's just understanding the details right so that's and then what you can do is go to a you know your price chart and then just basically that's your list for this week now going on to the economic data actually just before we get into the economic data just wanted to just highlight as well and another fact is that although I may be for example long CAD New Zealand dollar one seconds right although might be long we still have to wait for a decent pullback right so we know CAD Yen say they say CAD New Zealand dollar I meant to say CAD Yen sorry apologies CAD Yen although you know we are we want to get long in this currency pair we have to identify first of all where we are on a price chart and where the bargains are so I'm looking for obviously a demand zone yeah for a price to come down to or maybe some sort of CPR or a stop point to occur but understanding the bigger picture first is is this the best place to buy best place to buy and the answer would probably is a probably is definitely no so if prices are pulling back yeah we want to wait for decent pullbacks to you know the best levels in order for us to you know get long in this currency pair now I don't know if that will happen this week or even this month it could take forever for prices to potentially pull back I don't know whether even prices may pull back from here prices could go to the upside either way you you know we must wait for you know decent pullbacks yeah decent pullbacks to to to look for buying opportunities because at the end of the day we're looking for value and bargain and cheap cheaper prices then buying at highs and no none of us know for example how long that pullback may take if prices do pull back this week or even this month nobody knows right but if we do get some sort of pullback and let's say for example the whole week prices pulled back let's say for example the yen or the Canadian dollar got weak the whole week right but if it never reach if it never reaches you know our demand zone doesn't mean that we should have got long during the intraday if there's no setup there you know we have to always always always always look for the best buying opportunities technically and there's never you know buying opportunities are everywhere every single day if you want to take buying opportunities but the best buying opportunities you have to wait for prices to come down to you know demand zones CPR zones at least put in some sort of stop hunt trade in order for us to look for any kind of long trade and I don't know how long that will be yes we do weekly analysis but doesn't mean that this week that you know the prices were going to go you know skyrocket on the on the Canadian dollar nobody knows so from that perspective just keep that in mind when looking at you know price charts look for pullbacks pullback happens this week great if it doesn't happen this week then look for next week if it doesn't and as long as the fundamentals and the risk sentiment doesn't change yeah as long as it doesn't change then risk on risk off row row long as it doesn't change then look for you know demand zones in the direction you want to trade or supply zones in the direction you want to trade