What happened in the US session?
The US dollar strengthened strongly as overall volatility increased arising from the interest rate decisions from the ECB and BoE.
What does it mean for the Asia Session?
Look for the major currencies to consolidate briefly and possibly lose ground against the DXY, with the US employment data due to be released today.
The Dollar Index (DXY)
Key news events today
USD Average Hourly Earnings
USD Non-Farm Employment Change
USD Unemployment Rate
What can we expect from DXY today?
The DXY rebounded strongly from the 100.70 key support level, climbing steadily higher to the 101.70 price area. This move higher was due to the significant weakness of the EURUSD during the ECB interest rate decision. While a further move to the upside is anticipated for the DXY, look out for significant volatility in the DXY, with a series of employment data due to be released today. A better-than-expected Non-Farm employment change (Forecast: 193k Previous: 223k) could see the DXY strengthen further and climb significantly higher to the next key resistance level of 102.50.
Central Bank Notes:
- Federal Reserve hiked rates by 25bps taking interest rates to 4.75%
- Next meeting is on 23 March 2023
- Ongoing rate increases will be expected
Next 24 Hours Bias
Medium Bullish
Gold (XAU)
Key news events today
No major news events.
What can we expect from Gold today?
Gold broke out of the consolidation along the 1955 price level to trade significantly to the downside, reaching the key support level of 1920. This strong move lower was due to the recovery in strength of the DXY overnight. If the DXY continues to strengthen, Gold could continue with the downtrend to slide lower, with the next key support level at the round number price level of 1900.
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 strength of the DXY led the AUDUSD to reverse strongly from the key resistance area of 0.7160, breaking below the round number level of 0.71 to approach the price level of 0.7070. Further downside moves can be expected if the DXY continues to strengthen, with no major news on the horizon for the AUD. A deeper correction to the downside could see the AUDUSD test the key support area and round number price level of 0.70.
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?
Despite the strength of the DXY, the NZDUSD traded with significant volatility but no clear directional bias. The NZDUSD spiked down to test the 0.6460 price area before retracing sharply. Look for the price action to confirm a rejection of the near term resistance level and a break of the 0.6470 price level to signal further downside for the NZDUSD, with the next key support level at 0.64.
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?
While the DXY strengthened significantly overnight, the USDJPY failed to trade significantly higher, continuing to trade in a wide consolidation within the price range of 128 and 129. Look for a breakout potential to the upside if the DXY continues to strengthen, with the confirmation if the USDJPY breaks strongly above the 129 price level, with the next key resistance level at 130.
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 Bearish
