What happened in the US session?
Fed Chair Powell said again that the central bank might increase interest rates faster to combat stubbornly high inflation to the 2% target. This reiteration, solid ADP Non-Farm Employment Change and upbeat JOLTS Job Openings helped sustain Tuesday’s gain in the USD.
As expected, the BOC held its target for the overnight rate at 4.5%.
What does it mean for the Asian Session?
China’s CPI y/y forecast is 1.9% (previous 2.1%), and the PPI y/y forecast is -0.8% (previous -1.3%), impacting AUD as China is Australia’s biggest trade partner. Higher CPI may boost AUD, while better PPI could raise demand for Australian raw materials, increasing AUD’s value.
The Dollar Index (DXY)
Key news events today
Unemployment Claims
What can we expect from DXY today?
US Unemployment Claims data is due for release, with forecasted claims at 195K, compared to the previous figure of 190K. A better-than-expected figure could increase the dollar’s value and vice versa.
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
Bullish
Gold (XAU)
Key news events today
No major news events.
What can we expect from Gold today?
The reiteration of the US central bank’s hawkish stance towards inflation during Fed Chair Powell’s testimony should put further downward pressure on the price of gold.
Next 24 Hours Bias
Bearish
The Australian Dollar (AUD)
Key news events today
No major news events.
What can we expect from AUD today?
As there is no major news event for the AUD, the price direction of the currency is likely to be influenced by the recent comments made by RBA Governor Lowe. The chief mentioned the possibility of halting interest rate hikes as the monetary policy becomes more restrictive but emphasised the need for further tightening to achieve the inflation target.
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?
More robust than previous BusinessNZ Manufacturing Index (50.8) and Manufacturing Sales q/q (5.1%) data releases could temporarily strengthen 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
Weak Bullish
The Japanese Yen (JPY)
Key news events today
No major news events.
What can we expect from JPY today?
Upcoming data releases include Final GDP Price Index y/y (expected 1.1%, previous 1.1%), Final GDP q/q (expected 0.2priorous 0.2%), and M2 Money Stock y/y (expected 2.8priorous 2.7%). The impact on JPY is expected to be moderate, with M2 Money Stock y/y having a slight potential impact due to a possible increase in inflationary pressure.
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
The Euro (EUR)
Key news events today
No major news events.
What can we expect from EUR today?
Upcoming French Final Private Payrolls q/q data is forecasted at 0.0%, same as previous. If there’s a surprise increase or decrease, it could impact the EUR value.
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?
No major news event for CHF today, so price direction may draw from the recent SNB Chairman’s speech about tightening economic policy through interest rates and currency interventions to stabilise prices.
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?
UK’s RICS House Price Balance data’s forecasted figure of -48% (previous -47%) may negatively impact GBP due to decreased consumer confidence and a slower housing mar. This leads to investors seeking alternatives and reducing demand for GBP.
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 Bearish
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 depends on the recent slightly hawkish BOC monetary announcements: Overnight Rate maintained at 4.5%; BOC is ready to raise the policy rate to return inflation to 2%.
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
Weak Bullish
Oil
Key news events today
No major news events.
What can we expect from Oil today?
The recent reaffirmation by Fed Chair Powell regarding the prospect of a more rapid increase in interest rates has sparked a substantial surge in the value of the US dollar. This development has the potential to exert a downward influence on oil prices and could have wider repercussions for the global economy.
Next 24 Hours Bias
Weak Bearish
