What happened in the US session?
The DXY climbed strongly leading most major currencies to lose ground against the US dollar. The S&P 500 closed lower due to the strength of the DXY.
What does it mean for the Asia Session?
The major currencies are likely to continue trading lower against the DXY.
The Dollar Index (DXY)
Key news events today
USD Non-Farm Employment Change
USD Average Hourly Earnings m/m
USD Unemployment Rate
What can we expect from DXY today?
Overnight, the DXY surged strongly to the upside as the price broke through from the 104 price level to trade toward the next resistance level at the 105 price level. This move higher was due to the significantly better-than-expected release of the ADP non-farm employment change data (Actual: 235k Forecast: 152k). This positive data led markets to anticipate a strong Non-Farm Employment Change data to be released today, leading to the strength in the DXY. Look for the DXY to complete the current retracement before trading higher again, with the next key resistance level at the round number price level of 106.00.
Central Bank Notes:
- Federal Reserve hiked rates by 50bps taking interest rates to 4.50%
- Next meeting is on 2 February 2023
- Further rate increases are expected to slow
Next 24 Hours Bias
Medium Bullish
Gold (XAU)
Key news events today
No major news events.
What can we expect from Gold today?
As the DXY strengthened, Gold saw a deep correction to the downside as the price reversed from the 1860 price area. Gold traded lower, down to the 1825 price level. If the DXY continues to strengthen, further downside can be expected for Gold, with the next key support level at 1814.
Next 24 Hours Bias
Weak Bearish
The Australian Dollar (AUD)
Key news events today
No major news events.
What can we expect from AUD today?
The AUDUSD consolidated at the 0.68 price level early in the trading session yesterday, with choppy price action. However, as the DXY strengthened, the AUDUSD traded significantly lower with the price breaking the round number support level to trade down to the 0.6730 price area. Look for the AUDUSD to retrace briefly before trading lower again if the DXY continues to strengthen. The AUDUSD could trade down to the key support level of 0.6690.
Central Bank Notes:
- Cash rate stands at 3.10%
- Future rate rises will be determined by data, the outlook for inflation, and the labour market.
- Next meeting on 7 February 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 NZDUSD failed to break strongly above the 0.63 round number resistance level. Combined with the strength of the DXY, the downward pressure on the NZDUSD saw the price trade significantly lower, down to the 0.62 key support level. The NZDUSD could trade lower to the next key support level of 0.6070 if the DXY continues to strengthen and the NZDUSD breaks beyond the 0.62 price level.
Central Bank Notes:
- Cash rate stands at 4.25%
- Central bank is likely to continue with the current path of rate adjustment
- Next meeting is on 21 February 2023
Next 24 Hours Bias
Weak Bearish
The Japanese Yen (JPY)
Key news events today
No major news events.
What can we expect from JPY today?
Although the DXY rose strongly overnight, leading the USDJPY to trade higher from the 132.70 price level, the move higher was of a smaller magnitude compared to the other major currencies. This is due to the decision from the Ministry of Finance to lift coupon rates of the 10yr JGBs to an 8-year high. Look for the USDJPY to retrace further and retest the 132.50 price level. If the DXY fails to strengthen further, the USDJPY could continue to trade lower, with the key support level at the 131.50 price level.
Central Bank Notes:
- Cash rate stands at -0.1%
- Expands range for 10 year JGB yield fluctuations to 0.5%, rather than the current of 0.25%
- Next meeting is on 18 January 2023
Next 24 Hours Bias
Weak Bullish
