What happened in the US session?
Most major currencies consolidated along the current price levels but traded with choppy price action during the US session. The S&P 500 closed at the 3.919 price level, slightly higher by 0.70%.
What does it mean for the Asia Session?
Despite a lack of key news events during the Asia session, look for breakout potentials on the major currencies, with the DXY likely to drive the next directional move.
The Dollar Index (DXY)
Key news events today
No major news events.
What can we expect from DXY today?
Overnight, the DXY traded with significant volatility as markets looked toward the speech from Chair Powell. However, with no definitive comments regarding future policy decisions, the DXY fluctuated between the 102.75 and 103.30 price range throughout the trading session. Currently, trading at the 103 price level, the DXY could continue to retrace higher toward the key resistance level of 103.50 before reversing lower again. Following the downtrend, look for the DXY to complete the retracement and trade below the 103 price level to indicate further downside potential, with the next key support levels at 102.50 and 102.00.
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
Weak Bearish
Gold (XAU)
Key news events today
No major news events.
What can we expect from Gold today?
Gold traded in a consolidation between the 1870 and 1880 price levels through the trading session yesterday. It is likely that Gold could continue to consolidate at this level in the interim, with a breakout potential to the upside. Look for further weakness in the DXY and the development of the price action to indicate further upside potential, especially if the price breaks above the 1880 price level to indicate a continuation of the uptrend, with the next key resistance level at 1900.
Next 24 Hours Bias
Weak Bullish
The Australian Dollar (AUD)
Key news events today
AUD CPI y/y
What can we expect from AUD today?
Early in the trading session today, the Australian CPI y/y data was released at 7.3% (Forecast: 7.2% Previous: 6.9%) which indicated that inflation in Australia was still growing stronger than expected. On the release of the news, the AUDUSD climbed beyond the 0.69 round number resistance level as the increasing inflation could spur the RBA into further interest rate increases. Look for the AUDUSD to trade strongly above the 0.69 resistance level to signal a continuation of the upside, with the next key resistance level at 0.7130.
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 Bullish
The Kiwi Dollar (NZD)
Key news events today
No major news events.
What can we expect from NZD today?
Through the trading session yesterday, the NZDUSD traded in a narrow 40-pip range, increasing the likelihood of a strong breakout potential. If the DXY completes the current retracement to trade significantly lower, look for the NZDUSD to break out of the current consolidation to trade higher. If the price breaks above the 0.6390 price level, the NZDUSD could climb toward the next key resistance level at 0.6480.
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 Bullish
The Japanese Yen (JPY)
Key news events today
No major news events.
What can we expect from JPY today?
The USDJPY continued to consolidate between the price range of 131.50 and 132.40 overnight, despite the volatility in the DXY. with no major news event for the JPY on the horizon, look towards a breakout of the DXY to determine the next directional move on the USDJPY. The USDJPY is likely to continue trading within the current range. However, if the USDJPY breaks strongly below the 131.50 price level, look for further downside with the next key support level at the price area of 130.00.
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
