What happened in the US session?
The DXY strengthened significantly overnight, leading to most major currency pairs losing ground to the US dollar. The S&P 500 closed slightly lower by 0.40% at the 3,824 price level.
What does it mean for the Asia Session?
A resumption of strength in the DXY could see the major currencies consolidate briefly before continuing to trade lower against the Greenback.
The Dollar Index (DXY)
Key news events today
USD ISM Manufacturing PMI
USD JOLTS Job Openings
What can we expect from DXY today?
The DXY surged strongly to the upside as the market liquidity increased with market activity resumed in the new year. The DXY climbed from the 103.25 price level to reach an overnight high of 104.65 before retracing briefly. Currently trading at the 104.30 price level, look for the DXY to break above the previous swing high to signal a continuation of the upside, with the next key resistance level at 105.63.
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?
Overnight, Gold climbed strongly from the 1823 price level to reach the 1850 price level twice before trading lower again, due to the strength of the DXY. However, the price action at the interim support level of 1830 signals a rejection of further downside potential, with Gold climbing higher toward the 1845 price level. Look for the XAUUSD to break above the 1850 price level to signal a continuation of the uptrend, with the next key resistance level at 1900.
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 NZDUSD, the AUDUSD traded significantly lower due to the strength of the DXY, with the price sliding down to the 0.67 price area. However, as the momentum failed to lead the AUDUSD to break the key support level, the AUDUSD rebounded and is currently trading at 0.6770. The current price action indicates potential for a further correction to the upside, with the AUDUSD likely to trade higher toward the interim price area of 0.6850.
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 traded significantly lower due to the strength of the DXY yesterday. The NZDUSD reversed from the 0.6360 price area to reach the 0.62 round number key support level. However, as the price failed to break the support level, the NZDUSD ended the trading session at the 0.6250 price level. Look for a continuation of the downtrend with the price likely to retest the key support level of 0.62.
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?
The USDJPY bounced off the 129.60 price area to trade higher toward the 131.50 price area due to the overnight strength of the DXY. However, as the USDJPY failed to break above the 131.50 interim resistance level, the price is likely to continue to range between the 131.50 and 129.60 price levels. If the DXY resumes with further strength, look for the USDJPY to break above the 131.50 price level to trade higher toward the next key resistance level of 134.50.
Central Bank Notes:
- Cash rate stands at -0.1%
- Expands range for 10 year JGB yield fluctuations to 0.5%, rather than the current of 0.25%
- Next meeting is on 18 January 2023
Next 24 Hours Bias
Weak Bearish
