What happened in the Asian session?
The safe-haven USD continues to weaken following the Fed’s joint announcement with the USDT and FDIC, outlining measures to bolster public trust in the US banking system and safeguard the country’s economy.
What does it mean for the Europe & US Sessions?
The current risk-on sentiment appears weak and vulnerable to potential “bank runs” on other financial institutions. Should news of such events emerge, it’s likely that investors will become fearful of contagion, which could hamper any further gains in risk-sensitive currencies. In this scenario, investors may divert their capital towards safe-haven assets such as gold.
The Dollar Index (DXY)
Key news events today
No major news events.
What can we expect from DXY today?
No major news for USD today, so its price direction may draw from previously released lower-than-expected labour data. The US dollar may weaken in the short term as investors respond to these lower-than-expected figures.
Central Bank Notes:
- The Committee has raised the federal funds rate target range to 4.5-4.75% and plans to continue increasing it to return inflation to 2%
- The Committee will monitor incoming information and adjust the stance of monetary policy as appropriate to achieve its goals
- A majority vote from the Committee supported the decision to raise the target range
- Next meeting is on 23 March 2023
Next 24 Hours Bias
Bearish
Gold (XAU)
Key news events today
No major news events.
What can we expect from Gold today?
The anticipated weaker USD could boost demand for Gold as yellow gold becomes relatively cheaper for buyers using other currencies. Tuesday’s lower expectations on US inflation would provide another bullish jolt.
Next 24 Hours Bias
Weak Bullish
The Australian Dollar (AUD)
Key news events today
No major news events.
What can we expect from AUD today?
Despite a lack of AUD data, RBA Governor Lowe’s recent comments may impact the currency’s price. He discussed the need for tightening to meet inflation targets while halting interest rate hikes due to a stricter monetary policy.
Central Bank Notes:
- Cash rate raised by 25 basis points to 3.60%.
- Board prioritises returning inflation to target, with a likely need for further monetary policy tightening.
- Board to closely monitor the global economy, household spending trends, inflation and labour market outlook when assessing interest rate increases.
- Next meeting on 4 April 2023
Next 24 Hours Bias
Weak Bearish
The Kiwi Dollar (NZD)
Key news events today
No major news events.
What can we expect from NZD today?
The latest BusinessNZ Services Index increased from 54.7 to 55.8, indicating sector expansion, potentially strengthening NZD. On the other hand, FPI m/m decreased from 1.7% to 1.5%, leading to reduced inflation and a potential weakening of the NZD.
Central Bank Notes:
- Monetary Policy Committee increased the OCR from 4.25% to 4.75%
- Higher interest rates are needed to reduce inflation and support employment sustainably
- Severe storms in North Island will increase inflation and disrupt production.
- Next meeting is on 5 April 2023
Next 24 Hours Bias
Mixed
The Japanese Yen (JPY)
Key news events today
No major news events.
What can we expect from JPY today?
The upcoming release of the JPY BSI Manufacturing Index is forecasted to be -4.2, a slight decrease from the previous reading of -3.6. This indicates a potential decline in confidence among Japanese manufacturers, which could negatively impact the country’s economy.
Central Bank Notes:
- The bank will continue with QQE with Yield Curve Control to achieve the price stability target of 2%
- Japan’s economy is expected to recover gradually
- The bank will not hesitate to take additional easing measures if necessary
- Next meeting is on 27 April 2023
Next 24 Hours Bias
Weak Bearish
The Euro (EUR)
Key news events today
No major news events.
What can we expect from EUR today?
The Eurogroup meetings’ outcome can significantly impact the Euro’s value in the international currency markets. Suppose the ministers agree on critical economic issues and propose policies that are seen as favourable for the Eurozone’s economy. In that case, it can strengthen the Euro’s position and increase demand for the currency.
Central Bank Notes:
- Main Refinancing Rate is currently at 3.00%
- ECB Governing Council to continue raising interest rates and reducing holdings of securities
- Future policy decisions to be data-dependent
- Next meeting on 16 March 2023
Next 24 Hours Bias
Mixed
The Swiss Franc (CHF)
Key news events today
No major news events.
What can we expect from CHF today?
Given the absence of any critical news updates for CHF today, the direction of its price may be swayed by the recent address given by the SNB Chairman. This speech outlined plans to stabilise prices via interest rate modifications and currency interventions, indicating a move towards tighter economic policies.
Central Bank Notes:
- Current policy rate is at 1.00%
- Next meeting on 23 March 2023
Next 24 Hours Bias
Weak Bullish
The Pound (GBP)
Key news events today
No major news events.
What can we expect from GBP today?
As there is no major news event for GBP today, the direction of the currency is likely to draw from the latest GDP m/m figures that show a growth of 0.3% in the economy in the last reported period. Although a lagging indicator, the positive GDP growth can suggest that the economy is recovering and may support the pound’s value.
Central Bank Notes:
- MPC voted to increase Bank Rate by 0.5 percentage points to 4%
- Near-term data developments are crucial in assessing how quickly external and domestic inflationary pressures will abate
- MPC’s updated projections show CPI inflation falling back sharply from its current level
- Next meeting on 23 March 2023
Next 24 Hours Bias
Weak Bullish
The Canadian Dollar (CAD)
Key news events today
No major news events.
What can we expect from CAD today?
No major news event for CAD today, so price direction is likely drawn from previously released labour data. Employment Change: 21.8K (vs forecasted 8.5K, previous 150.0K). Unemployment Rate: 5.0% (vs forecasted 5.1%, previous 5.0%). These figures may positively impact CAD’s price direction, albeit mildly and temporarily.
Central Bank Notes:
- Bank of Canada maintains its target for the overnight rate at 4.5%
- Inflation eased in January, but price increases for food and shelter remain high
- BOC is prepared to increase the policy rate further to return inflation to the 2% target.
- Next meeting on 12 April 2023
Next 24 Hours Bias
Mixed
Oil
Key news events today
No major news events.
What can we expect from Oil today?
An anticipated weakening of the US dollar may decrease the price of oil in non-dollar currencies, potentially boosting demand.
Next 24 Hours Bias
Weak Bullish
