What happened in the US session?
The DXY retraced strongly after climbing to a high of 102.40. The S&P closed higher by 1.46%, ending the session at the 4,076 price level.
What does it mean for the Asia Session?
Look for the major currencies to trade higher, with the DXY retracing during the Asia session.
The Dollar Index (DXY)
Key news events today
USD ADP Non-Farm Employment Change
USD ISM Manufacturing PMI
USD JOLTS Job Opening
What can we expect from DXY today?
Overnight, the DXY retraced strongly to the downside, after reaching the 102.40 price area. The correction lower was partially due to the weaker-than-expected consumer confidence at 107.1 (Forecast: 109.1) and slower growth in wage inflation. Currently trading below the 102 price level, the DXY is likely to consolidate along the current level with brief downside potential in the lead-up to the US Federal Funds rate decision on Thursday morning. However, if the price breaks above the 102 price level, the DXY could continue to climb to the upside, with the immediate resistance level at 102.50, and the key resistance level at 103. Alternatively, if the DXY continues to trade strongly lower, the price could slide lower toward the previous support level of 101.35.
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?
Early in the trading session yesterday, Gold dropped strongly down to the 1900 price area, as the DXY climbed. However, as the price failed to break below the round number support level, Gold rebounded strongly to the upside, reversing the losses to trade along the 1930 price level. If the DXY recovers in strength, look for a rejection of the 1930 price level to signal further downside with the 1900 support level a potential target. However, watch out for choppy price action as markets stay primed for several major news ahead.
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 traded down to the 0.70 price area yesterday, as the DXY strengthened. However, as the price failed to break strongly below the round number support level and the DXY retraced, the AUDUSD rebounded higher toward the 0.7050 price area. Currently consolidating align the 0.7050 price area, anticipate brief moves to the upside. However, if the DXY were to strengthen, the AUDUSD could reverse strongly down to the 0.70 round number support level.
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
NZD Employment Change q/q
NZD Unemployment Rate
What can we expect from NZD today?
Employment data for the NZD was released earlier today with both the employment change and unemployment rate data being worse than expected. The NZDUSD traded down to test the 0.6410 price area but failed to break below the support level. The NZDUSD could continue to range between the 0.64 and 0.65 price level if the round number support levels hold.
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?
During yesterday’s trading session, the USDJPY fluctuated between the 129.80 and 130.50 price range with no clear directional bias, despite the significant volatility in the DXY overnight. Currently, the price is consolidating along the 130 price level. Look for a possible break out to the upside if the DXY recovers in strength, with the 130.50 price level a possible target level. Alternatively, if the USDJPY trades lower to break the 129.80 price level, the price could slide down toward the key support level of 129.00.
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
