 Hi, my name is Leon Rowe currency trader in trading coach at trading 180.com and in this video I'm going to be talking about the currency war that is taking effect in the Forex market the foreign exchange market and really how to kind of navigate through potentially this this really kind of uncertain time and The bit of fundamentals here in fact a lot of fundamentals as fundamentals and resentment is really what drives price So if you understand this You'll be best placed to again try to navigate your way through this this crisis. So The currency war. What is the currency war? Well the currency war has been brought on by central banks and the central banks are trying to protect the economy via hiking holding or cutting interest rates or Something called quantitative easing or central bank intervention And all it is is really is They're trying to protect the Implementing measures to protect GDP. So as we know currencies are traded in what pairs. Yeah, so the way that you need to think about Coverage he trading is strength versus weakness Who's the strongest one and who's the weakest one out of two? So if you're trading the Australian dollar versus the US dollar You want to find out why the Australian dollar is strong and why the US dollar is weak or vice versa And then that creates what trends that will create, you know If the if if you're trading an Aussie dollar and the Australian dollar is a stronger out of two Yeah, then you get up trends if the dollar is the stronger out of two and you get downtrends Yeah, we should get something like that And if they're both of equal measure, then you should get what a ranging market at some point now What determines strength versus weakness is three things you've got inflation Yeah, you've got interest rates and You've got GDP so the better Interest rates are and GDP is an inflation as long as it gets a 2% target And when it comes to inflation the better The economy is is doing and the more of closer to a recession You know a Country is the worst that it's doing it interest rates and inflation, right? And I have a course that explains all of this free absolutely free The link is in the description box below watch that and then come back here if you don't understand what I'm saying But if you do continue watching so What's happening is is that the corona virus right is causing a global slowdown so What central banks are trying to do is cut interest rates now why they cutting interest rates or potentially introducing You know thing measures like QE right negative interest rates and central bank Intervention and it's because The cheaper your currency. Yeah, it doesn't necessarily mean it's bad for the economy In fact, the cheap currency is actually very good for the for the for can be good for an economy because Of exports. Yeah, I think of imports and exports Right as what you sell, right? All of these All of these are shops. Yeah, the dollar is a shop the Aussie Australian dollars is a business right and you as a business You want to sell, you know goods goods and services, right? So the more goods you can sell with it with it with a cheaper Export, yeah, the better. So if you've got two countries competing selling the same products, right? It's the reason why China Right, everyone goes to China To produce and manufacture their goods because they can they can you can produce the same, you know Phone or piece of clothing in China for pretty much pennies And if you was to do that in the US for example or England or in the UK It would cost you a lot more So the point is is to manufacture it in China and sell it You know to the rest of the world because China have a cheap exchange rate. Yeah compared to You know every every other currency. Yeah, so a cheap currency Isn't bad for an economy as long as you have obviously something of value to sell Yeah, the exchange rate Is good. It's the reason why one of the reasons why the UK never went into a recession after Brexit in 2016 or the announcement of Brexit. Yes, the pound plunged but what they did was is that that boosted exports because It was it made a British exports cheaper so they could sell the same goods for cheaper Therefore people were buying more to think about it. If you know You would go were to go into Louis Vuitton. For example, what Valenciaga, right? And then they had you could buy that Those clothes or whatever, you know could be apple whatever it is for an absolutely cheaper price You they probably end up selling a lot more because the same quality of clothes and same quality quality of goods but You know, you could you could you could buy more of that. So that's basically what exports are All right, or what what interest rates can do to the economy What also interest rates do with with an economy is that they allow businesses to borrow for cheaper Yeah, so they can invest into Into trying to to for growth. Yeah, so rather than borrowing at for example, you know 1.75 percent Which was what it was previously Yeah in in the United States yeah The Fed cut rates to 1.25 Yeah, and that has a knock on effect with businesses that has a knock on effect with mortgages people have more money in their pockets To uh to spend money because their mortgages are less Businesses can borrow more, you know borrow for for cheaper therefore invest or reinvest in you know, um in in in their company In times of trouble So what's happening, you know regarding um You know the the the currency war due to the due to the global slowdown. So globally, we know that the corona virus is spreading, right and so The first central bank to cut was the um australian central bank, right and they cut Rates to a record low of 0.5 percent. Yeah on corona virus concerns So they cut yeah, and they're currently at um 0.5 percent Then it was over to the u.s. Yeah to to to uh to see what they would do Remember because it's affecting everybody the corona virus is affecting everyone. So Um the federal reserve and that's his first emergency rate cut since the financial crisis Yeah, so again keep in mind that every Country is trying to protect what their GDP? Yeah by lowering interest rates Yeah, therefore they're trying to protect their gdp Sorry about that So that's the effect of um of cutting interest rates to now 1.25 percent and then the bank of canada did exactly the same thing the bank of england today Decided that they wanted to do emergency cuts. Yeah They slashed rates by 50 basis points surprising the market Yeah, so the bank of england are now at 0.25 Now the problem with the euro is that they are already at zero So Yeah, so they got other measures to do they can either cut into negative interest rates or announce more quantitative easing Japan are even worse. They are at zero minus 0.1 percent and they're already quantitative easing Uh, swiss frank. I think about minus. I think it's minus 1 percent. I think it is And so on and so forth for the the new zealand daughter isn't that bad? I think they're at 1 percent The moment Yeah, so what does this mean? So what does this mean? Overall, let me get to the point the point is is that interest rates Yeah, and the fact that they're cutting Uh, all central banks are cutting interest rates is Who is going to be best to weather the storm? Yeah, who is going to be best to weather the storm who's in the you know as once was told to me You know, you've it's the dog with the least fleas at the end of the day. Yeah Who is going to be the which country is going to survive or be least affected? By it by the by the corona virus slowdown, right? Europe are already in recession territory. Japan are in recession territory as well Yeah, the bank of england and in the uk are also their best place at the moment are the u.s. dollar Right or the u.s. Economy at the moment because their gdp is a lot higher than The rest of these guys. Yeah, so Who's going to reach recession first and recessions normally last for an average of they say two years, right just an average So it's not really about interest rates right because You know the bank of canada when they cut interest rates if you go to financial times What it says here is that central banks or finance authorities across the globe have vowed to enact stimulus measures as needed With the spread of the virus causing angst among like investors. Yeah, so there is a coordinated effort There's a coordinated effort amongst the central banks to protect their economies now None of us know what these measures are going to do to you know or do for the the economies of these particular currencies the hope is is that obviously interest rate cuts or quantitative easing or even The the dreaded central bank intervention, you know, japanese yen bank of japan or currency intervention alert as volatility surges Yeah, um is is going to have for the economy, but what the What they what we're looking for ultimately. Yeah is the what we should be looking at in the uh in this In these times is gdp. That's where In my opinion, of course, it's my opinion. That's where the focus is going to be Yeah inflation is probably going to be taking a backseat for now interest rates everybody's cutting Yeah, everybody's cutting rates doing emergency cuts now the bank of canada did an emergency cut the bank of england today did an emergency cut It's over to europe now tomorrow to see what they they're going to do and how they're going to react to everyone else and then over to japan and then over to um the swiss franc and then or switzerland and swiss national bank and then over to new zealand and then it's going to be back over to the australian dollar depending on what um Their gdp numbers come out So if if australian then their gdp comes out and it's as expected or you know, it's it's weathering the storm You can probably expect that the australian dollar to start to rally if the us You know gdp figures come out and they are terrible Yeah What happens is that puts pressure on You know the federal reserve to cut more rates or to you know to to do, you know, maybe some sort of fiscal stimulus Yeah, and then that would be You know, uh, what should happen typically and this is a game of probabilities is that the dollar should um, You know sink if you know, I'm gonna say sink but you know the value of the dollar will probably end up going lower But it all depends on gdp now This is what is in focus everything else as far as inflation And even interest rates are in focus to a certain degree and uh quantitative easing obviously the measure that the european central bank and uh The bank of japan and the swiss national bank are going to do is obviously in focus, but It's all about how that affects gdp and the more Uh, you know closer to a recession or if if you know the first into a recession, right those that is the currency Um, you should maybe be selling again. This isn't financial advice Um, I can't offer financial advice, but this is how fundamentals and risk sentiment work and just for Before I go as well, um, japan are actually in probably Japan and europe are probably the two in the worst situations Put the swiss franc at the moment and the bank of in and and the uk as well. So those four I would probably say Are in the uh, in in the worst situations out of you know, the eight and again, that's just my opinion not financial advice, but um economically, uh looking at the data these these are basically the uh the currencies I would be I'm personally looking to Sell in a risk on environment. Obviously the Japanese yen and swiss franc appreciate in value, which is problematic. So Um, again, there's a special caution with with these two. All right, but these two Are the ones I would be looking to potentially get short on anyways. Um, again, not financial advice I have to reiterate that. Um, most of you will end up, uh, you know losing your money in the forex markets I have to say that as a disclaimer. So, um, just but this is for educational purposes only, yeah um Some more advice is just manage your risk try to trade at the smallest risk you can 0.1 0.2 Percent or however small your account, you know Can manage, yeah Your aim is to stay in the game Right for as long as possible manage your risk let the profits take care of themselves go for more than what you risk and Eventually you should be okay. Anyways guys take care and I'll speak to you soon So with what I'm saying resonates with you. Why not check out trading 180.com There is a selection process to trade my supply and demand zone forex strategy I'm only looking to work with Individuals with the right mindset, you know, who are hard working as well. So, um, check that out And access really for less than one pound a day this some of the strategies in here are not for beginners So if you don't know what supply and demand is, please check out all of my supply and demand videos I have hundreds of videos on youtube so you can check that out first Um guys take care and until the next video. Have a good one