What happened in the US session?
The US dollar weakened significantly following the Federal Reserve interest rate decision, while the S&P closed higher by 1.05%, ending the session at the 4,119 price level.
What does it mean for the Asia Session?
Look for the major currencies to consolidate briefly during the Asia session with several major news events due later today.
The Dollar Index (DXY)
Key news events today
USD FOMC Statement
USD Federal Funds Rate
USD FOMC Press Conference
What can we expect from DXY today?
The US Federal Reserve hiked rates by 25bps taking interest rates in the US to 4.75%, with the accompanying statement providing no indications regarding a potential slowdown or pivot in future rate decisions. Initially, the DXY reacted positively to this release but reversed to trade significantly lower during the press conference, reaching the 101 price level by the end of the trading session. The DXY fell despite relatively hawkish comments from Fed Chair Powell, where he indicated that it was “not appropriate for rate cuts this year” and that “ongoing rate increases will be expected”. While the DXY is likely to continue trading lower with the current momentum, with the DXY trading along the key support area of 100.90, look for the potential of a brief rebound to the upside. A reversal to the upside could only be likely if the price breaks above the 101.30 price level.
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
Weak Bearish
Gold (XAU)
Key news events today
No major news events.
What can we expect from Gold today?
As the DXY fell strongly, Gold broke out from the near-term resistance level at the 1933 price level to trade significantly higher. Gold surged to a high of 1952 by the end of the trading session overnight. However, as the price claims a new high, look for the potential of a retracement before further a continuation of the upside move. Gold could retrace down to the 1940 price level before developing the next directional bias. If the DXY continues to weaken, Gold could resume the upward trajectory and climb toward the 2000-round number resistance 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?
Similar to the other major currency pairs, the AUDUSD gained strongly against the USD overnight. The price spiked to the upside, from the 0.7060 price level up to the 0.7150 resistance level. The next directional move on the AUDUSD would be dependent on the DXY. If the DXY continues to weaken, the AUDUSD could retrace briefly before trading higher toward the next key resistance level of 0.7250.
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?
The NZDUSD rejected the 0.6420 support level to trade significantly higher, breaking above the key resistance level of 0.65 overnight. Early in the trading session today, the NZDUSD has continued to climb upward, reaching the 0.6540 price area. Further upside is anticipated, however, if the NZDUSD fails to break above the 0.6540 price level, the price could reverse back down toward the round number price level of 0.65.
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 the release of the FOMC interest rate decision overnight, the USDJPY climbed to the 130 price level but rejected the resistance level, to reverse strongly to the downside. Currently trading at the 128.50 price level, look for the development of price action to indicate the potential of a retracement to the upside with the 129 price level as the first level of resistance.
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
