What happened in the US session?
Most major currencies traded within a consolidation during the US session, with no clear directional bias in the short term.
What does it mean for the Asia Session?
Anticipate that most major currencies will continue trading within the current consolidation with some short-term retracement heading into the weekend.
The Dollar Index (DXY)
Key news events today
No major news events.
What can we expect from DXY today?
The DXY continued to consolidate along the 102 price level overnight with no clear directional bias, despite hawkish comments from Federal Reserve Member Brainard that the US economy could avoid a recession and indicated that the FOMC was committed to bringing inflation down. Current price action suggests the potential for a brief retracement to the downside before trading higher again. Look for the DXY to test the 101.70 price level before rebounding higher toward the 102.65 price level. However, as the market approaches the end of the week, look out for potentially choppy price action.
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 Bullish
Gold (XAU)
Key news events today
No major news events.
What can we expect from Gold today?
As the DXY consolidates along the 102 price level and the global recessionary fears increases, Gold continued to climb higher. Bouncing off the 1900 price level, Gold rose to the 1925 price level. If the DXY continues to weaken, look for Gold to break above the 1925 price level to signal brief upside potential, with the next key resistance level at 1950. Alternatively, if the DXY strengthens, Gold could retrace from this near-term high, back down toward the 1900 round number support level.
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?
The AUDUSD traded slightly lower overnight, as the price consolidated along the 0.69 round number support level. With no major news events for the AUDUSD, the next directional bias will be heavily dependent on the volatility of the DXY. Look for the AUDUSD to continue consolidating along the 0.69 price level before trading lower again. If the price breaks strongly below 0.69, the next key support level is at 0.68.
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 slid lower through the trading session yesterday, dropping from 0.6445 to 0.6370. However, toward the end of the trading session, the price retraced to consolidate just below 0.64. If the DXY continues to weaken, this could lead the NZDUSD to trade higher beyond 0.64 toward the next key resistance level of 0.6515. However, if the price fails to break beyond 0.64, the NZDUSD could complete the brief retracement before trading lower again, with the key support level at 0.6335.
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?
Overnight, the USDJPY consolidated along the 128.30 price level, with no strong directional bias. As the USDJPY remains below the 129-round number resistance level, with no major news events on the horizon, the current price action suggests the potential for further downside. Look for the USDJPY to break below the 128.00 price level to signal a continuation of the downtrend, with the next key support level at 126.30.
Central Bank Notes:
- Cash rate stands at -0.1%
- Expanded range for 10 year JGB yield fluctuations to 0.5%
- Next meeting is on 8 March 2023
Next 24 Hours Bias
Weak Bullish
