 Hi, my name is Leon Rowe currency trader and trading coach at trading 180.com and welcome to this week's forex and gold fundamental and technical supply and demand analysis If you like the videos that I provide every week and think that it's useful Don't forget to like subscribe and share With your fellow trading colleagues as it is a great way to support the channel free way to support the channel so let's get into the the week ahead and Week ahead, it will be a busy week in the US with fair chair Fed chair Jerome Powell speech at Jackson Hall Symposium, which takes place once a year taking central stage following Followed by several data releases including personal income spending durable goods Orders new home sales and the second quarter GDP estimates, right? That's going to be very important Also flash PMIs for August will be published for the US You and the UK and Australia Germany and France and Japan So finally investors will closely follow the monetary policy meetings in China, South Korea and Indonesia. So Lots going on this week And the devil is in the details, which you can have a really forget if you go to trading economics comm and click on the week ahead tab But let's get into some of the charts and a bit more fundamentals as to what's happened over the The past week and starting off on a dollar index and the dollar index is just a measure of dollar strength against various currencies like the pound the yen and the euro and use the dollar index as As just a confluence when they simply trading this confluence But one of the things that you really want to do is understand if you're new by the way To this channel is understanding really the fundamental analysis because fundamental analysis is really determining current and future value and I've been pretty much Saying that I'm long on dollars. I was saying I was long on dollars even as we were coming down here I want to say that, you know, we're going to predict the the exact turning points at all times But the money is made generally typically, you know to the upside and the money's been made to the upside And just basically just looking for pullbacks to get long and so a couple weeks ago This is basically what we had even in the face of you know, I Guess trade is thinking that there was gonna be my guess a Bit of a deeper pullback and a and a recession. Anyways prices were obviously seen as a bargain that this at the 105s and Prices have gone through and if and if the fundamentals basically say that this is undervalued There's no supply zone in the world that is going to stand, you know, technical analysis level That's gonna stand in the way of, you know fundamentals of risk sentiment So as we've made our higher highs and higher lows right here and here You know, the dollar is obviously seen as bargain prices around here and But I think we are coming to a bit of a top potentially saying that we're gonna reverse here But we are coming to a bit of a high this was seen as an expensive area back in July mid-July on dollar That's that's you know proven because prices didn't go higher than that, right? So that was definitely seen as expensive and this is now seen as a bargain price And we're heading back into really an expensive territory now Bond traders Bond traders is go to bet for 2022 is on the line at Jackson the whole so deeply inverted Treasury yield curve is a harder trade now and Traders paired bets on Fed rate cuts in 2023 last week and into it in the past week. So It's really important to keep an eye on what the bond traders are doing, you know forex and government bonds Treasury yields are a very highly linked and in fact, you know bond traders are Really some of the smartest guys, you know traders on the planet. They have to have the foresight To really kind of predict And forecast what the economy is going to do and what the what inflation is going to do and as well as Interest rates and what the Federal Reserve is going to do because that really has an effect on Bond yields and not to necessarily get into it right now, but just understand there is a yield curve and let me just get a pen tool and trying to try and break this down as quickly as I can but there's a yield curve, right and You have This is this is time, right? And this is the the yield, right? So it's an in percentage terms now With with government bonds investors expect a return, right for holding government debt, so What in in a healthy economy what you what should happen is the yield curve should look like this And if this is two years, this is maybe five years, this is ten years. Yeah You should receive a higher yield for holding Treasury bonds and government debt for for longer, right and It's because well, you know, you're taking on more risk if you think about it If you're holding a you know Treasury yield for ten years Yeah versus two years you should be compensated more, right for holding Those Treasury years yield for ten years rather than two years, right? And it's the same thing for example with six months if I hold, you know, Treasury yields for six months Over two years that should be really, you know lower than than two years, right? So so you're compensated for the amount of time that you're holding those yields now If you have a flattening yield curve or an inverted yield curve That is typically not good When it in terms of Where bond traders think the economy is going to potentially go and what the Fed are potentially doing with Interest rates, right? I'm not gonna get into it in this video, but something that I showed of the mentees in the In our in the discord group, but It's really important as forex traders to watch what is happening with the yield curve as that will tend to Predict or forecast What potentially is happening with the economy interest rates and inflation? So again Wages on a flattening yield curve has been Have been a winner for most of the past year with rates on longer dated securities moving lower, right? So longer dated securities meaning the 10-year, you know 20 year moving lower relative to short-term benchmarks Which is like the two-year. Yeah, so as I said, you know, if if if the 10-year is moving down and you know towards the where you're getting the same yield as the two is the two-year That's really a flattening yield curve and it doesn't you know bode well for You know for the economy anyways and in many cases even quite deeply below Those moves came as traders anticipated a capitalization on the Fed sequence of increasingly big rate Increases that are aimed at tackling persistent high inflation the two-year treasury yield ended this week around 3.6% right about 28 basis points higher than the 10 years So basically you're putting that on a graph the two-year is Is actually higher than the 10 year which is slightly inverting, yeah Now what I want to read is this pretty much is pal We want to err on the side on on the hawkish side stressed Stressing that restoring price stability is the top priority said Tim Magnuson Chief investment officer at God a capital partners a hedge fund the flatter will be Play the sorry the flattener will be in play until the Fed stops tightening However, it is a harder trade now having already moved so much so again, just important to really understand the yield curve and watch the yield curve and That really does have an effect on On currencies in the rich where you want to trade now the Fed is also Prioritizing Hike rate hikes over the economy and so they see inflation as a bigger threat then Then then a recession right in terms of in terms of a sorry great hikes over inflation Is the is the is the lesser of two evils so they'd rather prioritise having Higher interest rates to combat inflation and then deal with a potential recession afterwards Rather than letting inflation get out of control. So feds Barkin says central banks will do what it takes to curb inflation Which is basically hawkish, right? So you can You know the likelihood of the Fed still being hawkish and still trying to appreciate the dollar Is probably the path of least resistance. So that's what we're you know, you're probably likely to see The the bank try to influence the dollar, right? So the Federal Reserve Bank of Richmond President Thomas Barkin said the central bank was resolved to curb red-hot inflation Even if that meant risking a US Economic recession we're committed to returning inflation to our 2% target and we'll do whatever it takes to get there Barkin said Friday during an event in Ocean City, Maryland He said that this would be achieved without tremendous decline in activity, but acknowledge there were risks anyway so getting back to You know the dollar and pretty much. What does that mean for the dollar for me? It's still I'm still looking to go long on the dollar now as we're getting to expensive areas I'm not too keen on buying the dollar around, you know highs personally. I want to wait for pullbacks To look to buy the dollar so These areas here prices can pull back that will be Brilliant as a confluence. So for me my bias is still to the long side Do I know what's going to happen this exact week? No in the short term? Nobody knows right, but regardless it's really about understanding value over the medium to long-term and looking for buying opportunities and looking for you know bargain prices, so Dollars in a bit of an expensive area. I think the The the Federal Reserve 75 basis point rate hike is being priced in So it's a basically a buy the rumor All right The rumor was being bought all the way down here with the smart money while everyone else was going short on the dollar Smart money was looking to buy and this is basically what we were looking to do as well And many of the traders in the group and the private members group ended up buying the dollar around this this area here and making some decent profits, so But right now potentially we could be obviously coming to a high and expensive area So again my bias is still to the long side, but maybe wait for a bit of pullbacks on the dollar Looking at the dollar yen and the dollar yen Pretty much again is a reflection of you know dollar index going higher again. This was a very nice buy trade pullback in the last week or two and Yeah, look at pretty much what happened there You know because if you think about where we are in terms of One issue policy and a Japanese yen The Bank of Japan is still not looking to hike rates and the Federal Reserve are right The Bank of Japan are basically holding rates still At the figures minus 0.1. So Again, where are you going if you're looking for? Yield and the return on your investment. You're not going to put it into the Japanese yen Are you in fact that would cost you money so? You know the dollar was definitely seen as a bargain down here And I was saying this if you check out the videos over the last couple of weeks and go back to these these dates You'll hear me say I'm a buyer of the dollar my bias and this is basically what has happened. So deleting that supply zone and moving maybe this demands on up a little bit more and We are where we are now again if you do want to look for short trades on the dollar And by the end and you think that the yen is a bargain around here Let's say for example some sort of you know risk event comes into play then that's a decent trade A technical trade, I do like it technically but just you know from a fundamental perspective I'm not really keen on buying a yen until The Bank of Japan really kind of switch their policy their monetary policy I probably look for pullbacks into that one three free area before looking at a buy or even better still if prices Come down to this one three one. That's another buy right there And again this area here the one one three is one three lines. I think are Decent sells it depends on obviously Which way you do want to you do want to buy if you think that the dollar is expensive here and then the Japanese yen is a bargain up here Which it was here, right? It was seen as a bargain here or the dollar was seen as expensive Then that could be a decent trade, but for me the path of these resistances still to the upside dollar CAD Dollar CAD not really a pair that I'm interested in trading but As both central banks are hiking rates But the dollar is seen as the is now seen as a stronger of the two For several reasons and also one being you know oil basically selling off a little bit Which is reason why you're seeing? The dollar strengthen and the dollar tends to strengthen in more of a risk-off scenario anyway Now you are back up into a nice supplies on a technical level not the best level in the world to be fair It's decent. It's got that kind of hard-out movement But you really want it to be fresh a fresh area of supply and this isn't necessarily the freshest area of supply when you look To the left is you know to see basically what's happened there So that would have been the fresh area as prices came back and now that level has been touched So if you do want to get short, it's not necessarily an a1 setup If you think that sorry, I'm talking about buying the Canadian dollar, sorry Swiss Frank dollar Swiss so that kind of puts Difference been on it obviously, but with the with the with the Swiss Frank fundamentally Actually, no, it doesn't really because the Swiss Frank Swiss National Bank is still hiking rates the The dollar is still hiking rates. So again, it's not really a pair that I'm interested in too much, but Yeah, technically it's still the same I personally would rather if I was looking to for short trades around a 97 area Or if I was looking to buy the dollar against the Swiss Frank then this I think is a is actually a decent area to look for Some long trades, but but yeah, I think the Swiss Frank is a buy I'm actually a buyer of a Swiss Frank, but just not against the the the the US dollar and the Dollar CAD so the dollar CAD similar again as I was explaining in last Chart thinking that it was the dollar CAD This is the dollar CAD and again similar thing where you had oil selling off Ryan and With oil selling off you had pretty much the CAD Weakened now I do actually like the this area here the top end of this area the one free for 1.3 150 to the 1 3 2 2 area as a decent short trade. I Think that's nice technically When we look at where we are though again and not really a currency pair I'm looking to trade simply because they're both doing okay But my bias if I was looking to buy one or the other at the moment It looks like the dollar probably will Continue to strengthen on pullbacks look for pullbacks into that area there or if you get one into the one two sevens I think that's gonna be decent for a potential buy trade New Zealand dollar US dollar and Yeah, we've had Prices nearly come up into that supply zone didn't quite come up into that supply zone there but it created a new supply zone, which is here and With There being more guess more risk-off than risk-on You would expect the dollar US dollar to strengthen the New Zealand dollar that she did Hikrates this this this week called the door or the past week and I do think that there is a Guess an opportunity to look to buy the New Zealand dollar In and around these lows Personally, I'm not gonna buy it But I can see why you would want to buy this if prices do come down to the lows And I think that it could be a potential reversal round as 160s. So 160 is the 60 cent area As as we enter into I guess what was known as an auction again, this was a bargain price for the For that exchange rate for the New Zealand dollar and this was you know is seen as expensive and I do think that this could be seen as another bargain price if prices do come down here. It also depends on again just China as well global growth fears as well as You know the economy really kind of getting itself back on track in terms of the global economy, so I think that's a decent That's a very decent risk reward trade if prices can come down to these 61 or 60 cent areas and the potential buyer for the New Zealand dollar But I'm gonna stay out of that trade, but what I'm not staying out of is the pound dollar and pound dollar We've been talking about this for a while short trades Short bias on that pound dollar and it's pretty much played out As as expected, of course, no one knows exactly when it's going to go short, but You know the path of these resistance has been you know to the short side And I've been saying pretty much, you know that I'm short from around April times So it's just a matter of basically looking for pullbacks and then looking at short trades here. So We do have some supply zones and in fact this supply zone is quite a wide one So any pullbacks into that zone if you didn't get into this trade is a short from there Interestingly enough, we do have the Bank of England are looking to to high crates so but there's a lot of Economic problems that the US is facing so Inflation as well was was heading up above the 10% and a peak is still to come So eye-watering increases in household energy bills between now next April mean inflation is likely to head Above the 12% from October, but core inflation might have peaked or is close to peaking Now that goods price pressures are easing. We expect another 50 basis points hike from the Bank of England in Sorry Bank of England in September. So as inflation goes higher and higher In the UK, we're facing what's known as a cost-of-living crisis. And so as things are getting more and more expensive There's less money in people's pockets to really, you know spend on things in terms of just Retail right and going shopping and supporting the economy as we are a retail driven economy. So Cost-of-living is is really hurting the economy and Potentially, we may enter into a deeper recession than other other economies and this was a HSBC reports that are from the 10th of August which the guys in the group would have had access to and And so basically from then we knew that we not from then but we knew that we wanted to continue our bias Short as you know HSBC as many as well as many other banks. We're talking about The Bank of England hiking rates, but the pound weakness is not over yet, right? So this was from the 10th of August, right? We go back to the 10th of August Somewhere around here, right where we were looking at, you know still shorting the the pounds, right? And so, you know what you've seen is One second. Where is that? Where's that report? Here we go You know the bias was still to look for Short trades and you have you know the bank HSBC yeah, who are not trying to fool you because they're you know clientele You know our You know paid subscribers, right? And so they're not trying to be wrong all the time to mislead their their subscribers, right? And they're their clientele so So the Bank of England hiked his policy rate by 50 basis points with one dovish descent the Bank of England forecast a deeper session starting from fourth quarter 2022 and Further Bank of England hikes unlikely to prove beneficial for the pound in our view And we expect the pound to weaken against the dollar over the short to medium term and that's pretty much was you know I'm confirming my view on the on the on the pound So with with that being said As well as I think there was another bank that was talking about the the Shorting of the pound one second. Let me just find it Right. So this was from again MUFG Who were pretty much this is the latest report from the 19th of August and they were basically saying and they're down side risk to second half of the year pound forecast with the potential for a sense of crisis spreading to FX and it says that way They were close to hitting their end of Quarter three pound on a forecast of 117 90 and they certainly expect levels below that in the near term We also expect look the low from July of 117 60 to break so COVID lows just below 115 would be the next insight leverage funds Recently doubled their long positions of pound and look to be long and wrong Those positions are probably being cut now in the move lower. So again Understanding that, you know Where we are from a from a you know a high time frame perspective I'm not saying that, you know, you have to get you know short today because if anything you're buying You know, you're selling at lows, which is something that you definitely don't want to do If so if you're not in this trade looking for a pullback Into a zone is going to be really the The best course of action if you're not in this trade and again, this is not trading advice This is not a trade signal or anything like that. It's just if you agree Then um, you know, then you can you know, look take take the Take the traders as you want. I'm just showing you what pretty much I'm doing and if you really want to get like a lot of in-depth fundamental analysis And I know a lot of people have been asking me about My fundamental analysis spreadsheet They've been getting some emails about the fundamental analysis spreadsheet and And so this is part of really an access to this is part of The mentoring group which is opening in fact on the Fifth of september and it will be open only until I think maybe the 10th or the 11th of september I'm only going to have a short enrollment duration. So if you are looking to access You know, not only in supply and demand, but capture pain relief stop hunting And then really understand in-depth fundamental and resentiment analysis and understand not only the The fundamental analysis spreadsheet and understanding, you know, strength divergences convergences But also as well the currency value cycle because there are currencies that are ranked, you know One to eight one typically meaning that the currency is You know would appreciate one two and threes or the stronger currencies typically and six sevens and eights are typically the Would be the weaker currencies, but you also have to identify and understand that Currency is moving cycle. So there are going to be times where a number one A currency that's ranked number one two or three on the On the spreadsheet may actually be a one two or three that may be looking to devalue And in fact currency that is ranked six seven or eight Yeah, and and there's been devaluing There's going to be a point where in fact that's going to look very, you know cheap and a bargain six seven and eight And an example of that was for example the pound the pound was ranked number one and is now number three And I've been saying for a while that obviously my bias is to short the the pound that you've basically seen this And another one another example of currency revaluation is for example the swiss franc, right? So since the swiss franc started and the swiss national bank started to high crates It was ranked number seven. I think it was on the spreadsheet. I think it might be number six now That for me was actually they were on the revaluation end. So it's not just, you know Good enough to just look at, you know, the raw data and say, all right, then well, you know, I should be buying one and selling eight Um, you really there are things going on beyond the raw data Because if the fundamentals we're looking at future value as well, you've got to look at monetary policy what the You know risks things like risk sentiment in order to understand current and future value right and why is a currency likely to continue to strengthen and or Why is it likely to can maybe devalue of why a currency that is, you know devaluing way why it may want to start to revalue and so If you do want to get in-depth fundamental analysis mentoring And trading mentoring then enrollment opens on the 5th of september. So that's trading 180.com now Getting back to the charts. So for me the The dollar is still a buy against the pound backed up by obviously bank and Bank analysis as well. So me for me just waiting for, you know, any type of pullback to get back involved in this trade um Moving on to the euro dollar euro dollar Very interesting trade this and again similar thing with regards to the pound and really again Currencies are about understanding You know, which which currency is the worst or which currency is the best, right? Because it's basically a straight fight When it comes to understanding Currency appreciation or devaluation and again, I've been saying this for a very long time In fact, um, I've been short on the Euro dollar my bias has been short on the euro dollar for for 18 months I actually uh created a youtube video one second. Let me see if I can find it Here is right shorting the euro dollar for 18 months. It was a recent video. I did um with um The guys in the discord room and we were discussing pretty much my thoughts and Showing you evidence as to why I was short the euro dollar for, you know, my bias was short euro dollar for 18 months And this is where the money was made, right? Thousands of pips have been made potentially could have been made obviously holding those trades I didn't hold every single trade. It's not necessary to but if you have a bias, you know It's literally makes trading a whole lot easier because you understand that all you're buying is You know on pullbacks, right? Are you going to make, you know, is every single trade going to work out? Absolutely not but when it does work out that and you understand the power of Fundamental analysis and resentiment analysis you can get some very very good trades on pullbacks Just being patient and so, uh, you know proof to you know, you and everybody it's all documented in You know a discord group as to why, you know, I was short from last year the beginning of last year the beginning of 2021 So I go through all of that In this video on my channel and so, um similar thing again just looking at understanding Why you would want to get short on the uh on the euro because it's in a you know, worse situation than I think then the u.s and so, um, Europe The eurozone economy grew less than Estimated in the second quarter gross domestic products rose 0.6 percent with initial reading of 0.7 percent Economists say recession is now more likely than not and so, um Yeah, there's just science. I guess everyone's kind of heading into a recession but more so Europe are more affected and this is really because of um They've got a lot more problems, right? So european gas surges as heat and drying rivers drive demands for the ryan river At germany waypoint fell to new lower monday any spike in gas consumption could further tighten the market Why is that really important? and it's because um, germany which is um, uh, europe's you know Main economy is heavily reliant on the river to transport coal to its power stations Particularly now the nation is placing more emphasis on fossil fuels due to cuts in gas flows from russia inspired energy Said in an email note So so pretty much, um This is also exacerbating, um You know, uh energy prices in europe just like in in the uk where we've got the cost of cost of living crisis And energy prices of skyrocketing and projected the skyrocket like you know over the coming, um During the winter, uh, europe is in a in a in a very, you know bad situation Um as well, right? So again, if you're looking at who's better placed a lot of people will focus so much on you know The us and the collapse of the us dollar not really understanding that there are countries that are in, you know Worst situations then uh, then then the us and that is reflected, right in price That's pretty much reflected in that and if you don't understand this then you're just looking at the technicals Um, you're always going to be you know on the back foot and you're not going to understand these things Um, and you're forever going to be in that loop of just, um Um, of just you know bouncer from strategy to strategy and and whatever it is, right? But the point is is that if you understand fundamental mis sentiment analysis, if you understand what you're doing This is a no-brainer. It's actually quite obvious What they made a path for these resistance actually is you know over the medium, you know to long term Anyways, we're down into an interesting zone Um, again, do you want to be a buyer here of the euro? Um, personally not me even if it does reverse here Rather wait for pullbacks, especially up to the top the 103s to get involved in here Now what would make the euro a buyer in the short term is if, um, russian gas Isn't switched off right if the russians, you know agree that or decide that you know They don't want to cut their gas supply, you know fully or totally And then that would affect obviously The european, you know euro zone economy in terms of it will give it a boost and then you could see europe Or the euro start to You know come up to maybe these 104s even up up to these 107 areas But while the rumor is that, you know russia Still may turn off the gas pipeline Again, the power for these resistance for me is just pullbacks to supply zones um Aussie dollar Aussie dollars pullback This week again, not really a pair that i am interested in but if you are looking to buy the australian dollar then I actually think that this level here is is actually quite decent But more more from a stop hunting perspective not really a demand zone But um from a demand zone perspective, I think this area here the 0.67 is is actually quite decent technically And for some other fundamental reasons, I think that actually might be a decent Buy i was talking about Mentioning this with the guys in the group if i'm you know buying a commodity currency against against the Against the dollar it would be the the australian dollar So decent if you're looking at technically down at these lows if you're looking at you know Buying the u.s. Dollar then a pullback into These areas here A decent shorting opportunities Looking at the australian dollar Yen and i'm a i'm long on this and prices did come down to A decent zone didn't quite touch this a demand zone So i'm going to keep this demand zone here for now For me the really a really good trade is going to be if prices can pull back down into this 91 50 areas I do like that for a for a long trade in a buy trade um Again, just be careful of a risk sentiment But I do think overall the australian dollar should want to strengthen in the um In the going into the third and the fourth quarter is providing that China doesn't you know enter into into some sort of a recession or anything like that as China is australia's biggest trade partner And if china starts to shrink in in terms of gdp or they don't get themselves You know, they have another outbreak of um of coronavirus, etc Then that's going to affect the australian dollar trade which in the economy Which then would mean that the australian dollar is probably likely to um Uh to uh to devalue um Looking at gold finally gold and gold obviously with the dollar strengthening um Gold is obviously pulling back now. I do think that gold obviously in the long term is still a buy And the dollar will be a sell at some point, right? I'm definitely um considering Selling the dollar, um, you know at some point not anytime soon But there are certain triggers that i'm looking for um to actually sell the dollar so You know, basically this is more of a a long-term playing accumulation play In terms of uh buying uh gold against the dollar and uh, I do think that if prices do pull back to here And just below here, then um, I think that you know the 160 and 60s I do think that that's going to be a very nice Buying opportunity it's been you know proven that central banks are increasing their gold buys So uh for them as prices start to come down this represents a nice buying opportunity to buy gold If they believe that in the next maybe 12 to 18 months Um, you know prices should be somewhere up here or up here. So they're not in a rush to buy, you know They're not in a rush to buy Um, they'll buy when you know as they need uh to buy and you know The market makers will provide a liquidity for them to buy and that takes time, right? That can take weeks and even you know months for you know bank For investment banks the central banks to to really you know buy And to enter into you know certain positions and the scaling and the scale out of positions anyways guys for me, um Again long term buying gold any, you know, I think this is definitely a bargain price And just below that would be even an even better price if you are looking for Short trades then You're looking at a pull back into that zone, but that would represent You know going long on on on the dollar really So that's where we are. Anyways guys, that's it for this week. I hope you enjoyed the in-depth analysis And take care and I'll speak to you all soon