 Hi, my name's Leon Rowe currency trader and trading coach at trading 180.com and welcome to this week's a plan demand for it some gold fundamental and technical Analysis for the week ahead starting at 4th of September and for those of you who regularly check back Apologies for last week. I had to skip the video as last week was a bank holiday in the UK and I thought I'd take a bit of a break but I'm back for the week so lots are catching up to do and And yeah, let's get into it so the 4th of September It says it's from trading economics comm and it will be a relatively light week in the United States With the spotlight on ISM services PMI factory orders and foreign trade data elsewhere Australia in Canada will announce interest rate decisions. That's going to be important They're both really kind of expected to hold rates. In fact, especially Canada after their recent Data on Friday GDP growth figures will be released for Australia in Switzerland Additionally services PMI reading for China will be assessed for more risk off sentiment And if you are in the trading 180 mentoring group, if you go to the trading videos channel in the Discord group, then I have uploaded In-depth fundamentals the weekly ones that I normally do for the private members as well as the Technicals and if you've missed any of the videos for the week, for example, I've got CPR set up feedback I've got Euro yen stop-hunt and Aussie yen stop-hunt Breakdowns group call that we had on Wednesday a live group call has an hour and 15 minutes, etc So lots of videos to catch up on on the week if you haven't done so already So let's get into the technicals and more some fundamentals for the week and starting off on in fact Really the dollar index not the euro dollar so Dollar index is just a major of dollars jump against the basket of currencies like the euro the yen and the pound and on Friday we had jobs report come out and They basically report signals smooth downshift in labor market So still solid hiring slower wage growth gives Fed room to pause and so It was a bit of a mixed day at first I think the jobs report came out first and unemployment actually And non-farms came out and employment rose And so did unemployment at the same time as well as wage growth So it's a bit of a mixed one And I'll read it here anyway It says the latest US jobs data show the labor market undergoing a controlled cooling Illustrating illustrated by a solid hiring slower earnings growth and more people returning to the workforce employers in August added 170 187,000 jobs in a broad-based advance following downward revisions to payroll in the prior two months Government figures showed Friday hundreds of thousands more joined the labor force though a growing number was unable to find work Right away and it says here combined with a wage growth running at the lowest pace since early last year the data Illustrate why Americans are a little less upbeat about the jobs market while hiring and incomes are still firm enough to bolster consumer spending jobs opening and Retreated and layoffs are picking up. So what does that? All mean and it says that the moderation gives the Federal Reserve room to pause interest rate increases this month While keeping options open for another hike later in the year traders continue to see the Fed holding steady in September So the Fed hikes are pretty much Well the hold the probability of a Of the hold is pretty much priced in now no change 94 percent 6 percent chance of a hike because Inflation PCE data did come out. I think it was Thursday, and it did come out a bit lower wage inflation came out lower Unemployment came out higher But also as well employment FMC came out higher. So Things are moving in the right direction for the Federal Reserve, but it doesn't necessarily mean that the dollar is an all-out sell and one of the reasons why was because You had the US factory activity gauge suggested they would stabilization at weak levels So ISM index rose to a sixth month high of a forty seven point six in in August and so Basically the the manufacturing the purchasing managed manufacturing index, which is a measure an indication of Used food for GDP and an output in fact, although it's in the contraction phase we had The data come out actually and it seems like it's bottoming out so If it was continuing to go into the contraction mode, we would a little data We would have had probably the dollar sell-off because there would have been fears of a more of a hard landing But we've actually got contraction, you know bottoming out here so that actually ended up being positive for the dollar and What we saw for the dollar around about three o'clock when that ISM data did come out so initially the initial sell-off was due to unemployment figures go in higher and wages go in lower and the the the probability that the Federal Reserve are likely to hold rates But then when you had ISM come out and it wasn't as bad as expected in fact it was better than expected you had dollar appreciation and Because and I've been saying is to the group the private mentoring group for a while. We're gonna experience a shift in Narrative in terms of whether Currencies are driven by interest rates or more to do with the economy and so If the the the economy that is going to the country that's going to avoid a recession Is going to be the one that you really want to look to buy because there are other countries out there like for example Europe and we get to Europe in a little bit and They have a lot of economic worries And so what's what's happening is is that the narrative is shifting from interest rates has all Central banks are pretty much coming to an end of their interest rate hiking cycle to Who is going to be cutting first based off of? The the an impending recession or continued contraction and so that's pretty much What was the reason why you had the dollar actually go Appreciate the last maybe you know a couple of hours few hours of the day and so again Although yes, we are seeing a rate Hold again There is the process the possibility of also a rate hike as well if we go to November and you can see it in fact There's still a 33% chance of a of 35% chance of a hike And so that is also supportive of the dollar also as well We're supporting the dollar is that China and China's contraction and so money is flowing in a risk-off environment money tends to typically flow into the dollar and And out of risk on assets like China and commodity currencies So China ramps up campaign to boost fragile economy and the currency and so China intensified efforts to stimulate the economy And support its currency as investor concerns over growth outlook persist And so you've also got that support in the dollar so ultimately if you've been you know watching my channel for the last you know month or so a Couple of months I've been saying you know my bias is more to go long on the dollar and You know that's been justified of course With the data because the data has to support that narrative, but the dollar is best placed I think anyway, and so we had prices pulled back to that demand zone and then prices moved to the upside Although that was a very tricky one to take initially. I would have thought it would it would have probably sold off But the ISM You know the ISM manufacturing did come out and support in fact the economy So that was what boosted the dollar So I think any pullbacks on the dollar on certain pairs are probably buying opportunities Looking at the dollar yen and the dollar yen. I'm actually quite bullish on the yen Reason being is because the Bank in Japan are more looking towards Being the only really bank it next year who were possibly looking to hike rates while everyone else is probably holding or cutting rates But again, that depends on the inflation data and and their GDP data, but leading BoJ Hawk Broaches possibility of early 2024 rate hike, right? So I'll everyone else like I said, it's holding rates Bank of Japan Potentially could be hiking rates So it's a case of buying the rumor right the rain the rumor is starting to buy the rumor But against the dollar It might not be the best idea to be fair because the dollar is probably one of the stronger currencies But you do have in fact technically This area here in this area here says was analysis that was done a couple of weeks ago didn't update this chart anyways but yeah Prices did bounce off of that demand zone on Friday as you made higher highs higher lows so You can see prices made high Pullback made new highs and then pulled back to that area. That was a bargain price there So, you know, we had data that supported, you know buying there now I do think that prices in the short term could go higher simply because the Bank of Japan at the moment is remaining quite dovish, but the higher it goes we could see intervention come into the market, which is basically the Bank of Japan Actually buying their currency in an attempt to try to stem the evaluation which you know We'll push end up pushing prices to the downside or should anyways, you know I'm saying it will because there's no certainties in in trading But ultimately the levels that you're looking at if you're looking to short are going to be this Supply zone here the one for 650 is one for sevens If you're looking to buy the dollar you're probably looking for more of a pullback into this zone here before looking at Going long. So that's where you know, you're looking at The trades and again just looking at that from a daily then going down into maybe an intraday and looking at You know your entries whether you trade the four hour the two hour the one hour You know, I trade custom timeframe charts like the six and the eight as well. So So, let's see what happens in and around this zone here I think technically this is really nice Because traders are actually caught down here going short and then all of a sudden they are They're caught on the wrong side of the market So that's a setup that we know to be as capture pain relief Where traders have captured it going short and I think any pullbacks into this into this zone here I think going to be really really nice for a buy technically, but Over the medium to long term. I am a more bullish on the yen Going back to the dollar Swiss. So again dollar Swiss My bias would be to go more long on that dollar Swiss. So we are grinding higher There was a pullback into the into that demand zone Earlier in the week on Wednesday, of course the prices did, you know move to the upside So I do think any pullbacks, especially deeper pullback. I think they're going to be decent areas to go long the The Swiss Frank are the Swiss National Bank are looking to end their Their intervention they've been buying the Swiss Frank to appreciate it and they've reached their 2% target So I don't think that they're going to continue to appreciate their currency, which should in fact Devalue their currency. So but if you do want to be short on the Swiss Frank as far as you want to go long on the Swiss Frank and short on the dollar Then you're looking at that supply zone if you're looking to go long on the dollar pull back into that zone There is decent and I think that was like a long term. Yeah, it was more of a long-term Support area, which is actually worked right It's been validated. So dollar CAD The Canadian dollar came out there. They think their GDP came out on Friday with non-farm payrolls And it wasn't good. So I Think they're more of them in the contraction phase. So Yeah, we have really I think this currency pair is more of a buyer than a sell So any pullbacks if you do get any I think down into that zone is going to be nice as well as Down into the one three fours for now in the short term. You do have oil You know going higher so that could actually add to inflation But the probabilities and the chances of the Bank of Canada hiking rates This week, I think when is it now? It's going to be on PMIs and then you've got unemployment rate. So it's not on here, but it's going to be this week. I think it's Wednesday They're going to look to to hold rates, which doesn't support necessarily the Can Canadian dollar at the moment. So if you see any pullbacks, I think you're going to be Nice buyers that would be where my bias is to to trade this currency pair and New Zealand dollar US dollar same thing buying the US dollar over the Over the New Zealand dollar the path of this resistance is to the downside I think all of this you can probably class as some sort of supply Not greatest, but some and all the strongest area of supply at the moment, but I do think that But if you are looking to short the this currency pair, you can look for either Pullbacks into this zone or even better yet into that, you know 60 cent Area right here the underside of that level that supplies own to look for short trades There's really no reason to buy the New Zealand dollar so So yeah, it's just going to be For me anyway shorts all the way on this New Zealand dollar US dollar pair The pound dollar so again the dollar think the pound dollar should probably more range Because the pound is expected to hike one more time and so it says here That cracks in the economy in the UK economy will give the Bank of England pause for and so Uncomfortably high inflation and wage growth should seal the deal on a September rate hike from the Bank of England Emerging economic weakness suggest at the top of the tightening cycle is near and our base case is for a pause in November So, you know, I think in the short term you still have the Bank of England hiking rates And so that should be supportive of the pound in the short term. So any I think any pullbacks Should be buying opportunities. I'm personally not trading this currency pair. I think there are better pairs to buy the To buy the pound again So you're looking to buy the pound that the question you go ask yourself is is the dollar the weakest Currency out there and it by far is not so For me, I would look for Another currency pair, but if you are looking to trade this pair then you have got in fact all of this zone is going to be Supply and it's not necessarily pretty But I would say if you are looking to break down that wide zone, one of the things you can do is look for Horizontal support and resistance within these areas can even go down into the lower time frames and try and get a bit more Detailers to support resistance within that supply zone. So I think these highs around these highs are going to be decent for a To look for some sort of Reaction as well around here, and you've also got something probably around there as well. So That's what you can look towards but again for me, I'm not looking to take this pair I'm looking to look into I'm looking to buy the pound not against the dollar Euro so the Euro again Not you know, there's a lower probability of one more hike in fact, although the ECB Winch, I think so you pronounce it says a bit more probability Needed on rate hikes the European Central Bank might need to raise rates further Before coming to a pause in its hiking cycle said governing council member Pierre Wynch You know, he sounds hawkish, but the market doesn't believe him because Morgan Stanley and several other banks say the ECB rate Hikes are over so the bank previously expected a final rate increase this month slowing services inflation deteriorating economy Changes the view right because ultimately to hike as you're going into a potential recession or you know the contracting phase of the economic cycle What tends if you're if you're hiking Within that environment then you may push your economy deeper into a recession But the issue is or the problem is With that is that their inflation is still too high and and their man the banker mandated to get it down to their 2% target So they're in a tougher spot over the the US economy, right? So, you know, there is there a stagflation fears basically going on so When you look at the issues that the US have in comparison to Europe, I think Europe are in a worse place And this is what this is why you're seeing, you know, these lower highs lower lows, right? The power for these resistance is to the downside. You can make, you know reasons to buy the euro Of course, they are, you know potentially hiking, but it depends on whether the market believes them and I think the probability of them hiking Now isn't isn't great. I think it's lower than 50 50 so the power for these resistance is to the downside as the euro gets repriced and you know Economic fears start to get priced in as well. So Really, I think the path of these resistance as I said is to the downside You're looking at pullbacks into supply zones before looking at getting Short, I would say of course you can look to buy the the euro if there is supportive data, you know, I think this week. What is there you've got? Balance of trade, which is Really correlated with GDP growth. So if you have a good balance of trade, that might be a bit of a boost To the to the euro if I'm buying again, if I'm buying the euro Which I am against for example something like the Australian dollar or the Canadian dollar It wouldn't I'm not buying it against the the US dollar I think at the moment the US dollar is one of the stronger pairs. So it's not really a pair I'm looking to trade at the moment But those are your technical options Euro Swiss, this was a lovely trade You know a really nice stop hunt above that level and I spoke about this in the members area You know the euro stop hunt and we spoke about this in fact in the Set up a potential setup in the group call before it happened. But um, but yeah, so we've got euro yen Looks like the potential for a pullback in here I think if the euro continues to weaken whereas the Bank of japan Maybe you know intervene or you know become a bit more Horkish, then I think this is going to be really really nice this setup for a pullback into that Zone we do have some demand here. So you could see in the short term prices pulled back I think maybe this might be the the the high for now as prices have You know are in this in this auction they've been moving, you know sideways for the past Since maybe what the night for walkers. So pretty much nearly a month now prices have been going sideways So let's see what happens here But if you are looking to buy the euro at the moment Then now is a decent time if you're looking to buy the yen then I think any pullbacks into you know this area This supply zone is going to be decent for a buy trade Euro pound I think at the moment my bias would be to go Short on this currency pair where I'm buying the pound. I think the pound are in a Better position than then Europe only just but um, I see how many just but I think they have in them In a definitely better position when it comes to rate hikes, but um Yeah, I think any pullbacks into these zones. I think are decent shorting opportunities here and here If you want to get involved in that Buying the the euro Against the pound I think something would have to really kind of change from a fundamental perspective and I think for now Um out of two. I think the pound is probably the stronger of the two Ozzy dollar The australian dollar having their rate announcement this week as well They got GDP growth as well as balance of trade and that's it. They got the rba rate decision now They're expected to hold rates, but also is what it does depend upon The strength of the australian dollar will depend upon Um the How hawkish or dovish the statement is also as well, you know, we touched on it china Not doing good is also weighing on the On the australian dollar and really kind of you know supportive of the us dollar So we could see prices, you know fall to the downside that be the power for these resistance If price does, you know start to come up to these areas. I think these are nice shorting Opportunities as long as nothing materially sentiment or fundamentally changes with you know, the rba and the australian dollar Um, so yeah, I think those are the areas if you do want to be a buyer, of course of the of the australian dollar Then you do have this Let me just put this on here This is where This demand is so you can wait for prices to come back into that 83 84 83 Area and look for some buy trades there But I do think that you know the power for these resistances Still to the downside as long as risk remains more often china is um Is you know, it's still contracting etc. And then we've got gold so gold Came up to this supply zone That supply zone didn't hold the dollar obviously, you know being a lot stronger And uh, we've paused for a little bit or we reacted at this at this price point. So um, again gold Is is is reacting from maybe like a weaker dollar or maybe some risk offers. In fact, yeah I think about in fact if the dollar was strengthening gold really shouldn't have been strengthening So, um, the fact that dollar the sorry gold has been going higher Indicates that there are probably a lot more fears coming into the market or Or that there's probably Maybe the the market is trying to The gold bugs are maybe trying to price Price out rate hikes either way If you believe that the That gold is a A buy based off of you know economic fears recession fears then really looking for a pullback into that zone before getting Long so let me just tidy this up and zoom out a little bit. Yeah, so we did bounce off of this demand zone and There's demand there and then there's demand right there So that's where we are in terms of um In terms of buying gold and he pulled backs if you're looking to short gold I think this is going to be a really nice technical level to short gold So if you're looking to still buy the dollar, you think the dollar is going to be Strong and appreciate then in fact this is going to be a nice short so Again, it really just depends on on what you think fundamentally I think the dollar is coming to an end of its strength I think in the short term it probably can continue to go a little bit higher Um, if the data supports it, so I think maybe gold might start to you know come to the you know move to the downside Again, if the data supports it, right? So that's where we are and uh economic maybe chinese economic fears as well have been um, you know supportive of gold Um, if they're on the horizon, there could be some you know risk off events I've read somewhere someone's expecting a black a bit of a black swan event to happen this year So let's see. Let's see what happens um, but those are really the options and so That brings us to the end of this week's fundamental analysis And technical analysis video. I hope you have a great trading week And also as well for those of you who are interested in joining I will be opening up the mentoring group at the the first week of october I haven't decided on a specific date just yet, but um as soon as I do I will announce it in the videos So again, hope you have a great trading week. Take care and speak to you soon after their main export to china So a challenging path lies ahead for the economy both we and the rbnz of forecasting economy is in recession Starting from q3 But what remains highly uncertain is how much of the economy must slow to get inflation back to target We think that rbnz will eventually need to do more to get on top of inflation But we are closely watching china slow down which could do the job for it And let me again. I don't know if I said this last week, but I will reiterate this as again. Yeah Is that not all rate hikes are seen as positive Not all rate hikes are seen as positive The reason why is because If your hiking rates and gdp Is coming down right or you're already in the contraction phase You end up, you know the the the central bank is basically causing the gdp to go into a deeper contraction Right, which is again a harder hole to dig themselves out. Yeah, and so it's a conundrum that the rbnz is in Right, so the rbnz are like we've got high inflation of what's their inflation by the way something like maybe Six percent or something like that. Is it somewhere around there? But some days say six six percent somewhere around there and they're already in a recession Right So What do you do in terms of being a central bank? Obviously your mandate is to get inflation down But as you're getting inflation down You go deeper into a deep recession and a deeper recession and a deeper recession, right? And so inflation comes down but Recession gets deeper so It's a conundrum that that is a very very tricky one in terms of, you know, what you what is known as, you know, stagflation Now, how would the market take that? This is the thing Why this is the key thing to to note. Yeah, and again, none of us really know 100 The market could look at look at rate hikes and go. Well, they're doing a good thing Yeah, in terms of, you know, by hiking rates, we get a bit more of a return But if they're causing their economy to go into a recession, how much positive how positive is that? Right, because you have economies, for example I don't know an extreme example would be something like venezuela, right or Argentina not to pick on, you know, these south american countries, but you know, it could be african countries It could be iraq, right where you have Interest rates could be somewhere in a region or maybe, you know, 100% right you could have 100% interest rate Yeah, that's brilliant. That's excellent. Right. Why don't why doesn't the market flood? Why do you think the market doesn't start putting their money into, you know, 100% You know, I don't know argentinian peso. Why would you think that that is Not a thing There's why there's a couple of reasons, but Does anyone want to have a hazard a guess or a couple of guesses? As to why you wouldn't, you know, because you can turn the mic on if you want People still writing, maybe people are writing. All right, I'll put you at your misery No, I was saying why why wouldn't Why wouldn't if you saw a country is offering 100% Interest rate, yeah return on your money Yeah If we if if if if if interest rates are always positive if interest rates always, you know, are You know, I'll appreciate a currency 100% at a time. Why isn't the market putting their money into Really high yielding currencies like the, you know It could be the nigerian lira or, you know, the iraqi whatever they have, right? Why is it? testing Right. Well, one of the reasons Is that it's it's the confidence in in the currency, right? And so what you'll find is is that these the the economies and central banks that offer these massive returns If you look at their economies, their economies are Nonsense, right in terms of, you know, business international trade, right? The the reason why they offer such high returns is because They offset that with their economy being so poor and no growth, right? Because you're gonna have to invest to hold that currency You're gonna have to invest it's like investing in the country, right? You're investing by holding that currency You're investing in the country. That's basically what it turns down to right and so And so even though you might get 100% Who in their right mind is going to You know invest in that that that that country If they're in some deep depression, there's no business. Why would you? Do not mean it's a high risk also as well Those countries are at higher risk of defaulting. Yeah In terms of like, you know, when they when they when we when we talk about the us being a safe haven Currency, it's because they have a very probably the highest in the world, right? Probability of not defaulting on their debt regardless of what the doom and gloom is say out there I know, you know, there's the max crisis of the world and you know The the the manorinos of the world, right? These guys will try to convince you in hundreds and thousands of other pundits that will tell you that You know, the dollar's going to collapse and the dollar's gonna collapse No, it's not right I mean, I can't say it's not because anything can happen, right? The only thing in life that is certain is is death not even taxes because you know If you read the Panama Papers, there are people out there entities out there that are avoiding tax So the only certainty in life is death, right? but The point being is that You know the west the g10, right these these countries are less likely the least likely to default on They're on paying their debt and I get it they have massive Yeah, Ken says is it though, but it's true. It's the truth, right? And you might get downgrades. Oh one second. I'll mute you. Uh, welcome Frank I'll mute you as well But that because because you think about for example the s&p, right s&p 500 You think about the stock market the us stock market, right? What stock market in the world Is better than the us right In terms of, you know, the the the amount of money that they generate the output the companies Europe No, right the put see 100 Nope The the what what you know, I mean, but so so so when you look at the the stock market a stock market is representative of a A country's economy sometimes, right? Well a lot of times it's reflected not necessarily always in price. Yeah But even emerging markets, right? If you're looking at all right, what what what companies Outside a bigger than like tesla apple. Do you know what I mean? Amazon facebook That's there you go us for sure, right? So regardless of of how bad The us is is is doing from a debt perspective. They're still producing, right? And so the the thinking is is that they're least likely to default on their debt Yeah, because they're always going to produce they're always going to produce regardless Whether they go into a recession even a bust or slump phase. They'll still be able to pay their debts. Yeah Well, they're all I can't say always, but they're the most likely country to not default on their debt They'll find a way. Yeah, whereas if going back to this 100 percent Um interest rate, you know, these countries here, right the rest of the world Yeah, you might get 100 but these countries are more likely to default on their debt because Of their economies. Yeah, their economies are not competing with the west Yeah, with these massive, you know with with with japan with switzerland, etc with with europe, right and so No, it's not always A case of interest rates good Because this example will tell you that high interest rates don't always mean You know an appreciating currency So when going back to the new zealand dollar. Yeah, the new zealand dollar You know the the market may think okay, even though you're hiking rates You're putting pressure on companies in a recession investment. Why would I then invest in a country? Yeah, that is going into a recession and in fact interest rates are causing a deeper recession Why would I in fact hold new zealand dollars? If companies are going out of business Why would I Eagle eagle is yeah, the eagle says dollar is king. Yeah, all right, but but again, that's the question. Why would I do that? Yeah, why would I do that as an international investor? Yeah, I can get five percent on my money. Cool But i'm not going to invest if if big these big companies are going out of in out of business So hiking rates isn't always positive It's not always positive. And so if they're in a recession Yeah, if if a country's in a recession, it doesn't mean that yeah I'm still going to go and buy that currency because the central bank are hiking rates So Sorry about it being long-winded, but there's does everyone understand that Does everyone understand or does anyone not understand that? Yeah