What happened in the US session?
The US dollar traded with significant volatility toward the end of the US session as Fed Chair Powell spoke. As the DXY closed slightly lower, the S&P rose by 1.29% overnight.
What does it mean for the Asia Session?
Look for the major currencies to consolidate during the Asia session, with volatility on the AUDUSD derived from the release of the RBA interest rate decision.
The Dollar Index (DXY)
Key news events today
No major news events.
What can we expect from DXY today?
The DXY reversed strongly from the 103.90 price area, trading down to the 102.90 price area. However, the downward move was unsustained as the price reversed sharply higher above the 103 price level. The volatility in the DXY was due to the comments from Fed Chair Powell, indicating that ‘he expects 2023 to be a year of significant declines in inflation’. With the price currently at 103.22, the DXY could trade higher if the current price action indicates a rejection of the downside, with the immediate resistance level at the round number level of 104.
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 Bullish
Gold (XAU)
Key news events today
No major news events.
What can we expect from Gold today?
Despite the volatility in the DXY overnight, Gold continued to consolidate in a narrow price range between the 1860 and 1885 levels. Gold could trade slightly higher before trading lower again. Look for price action on Gold to test and reject the 1890 price level. A lower level confirmation of the downside would be signaled if Gold breaks below the 1860 price level, with the next key support level at 1800.
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 higher following the RBA interest rate decision and hawkish rate statement. Coupled with the volatility of the DXY overnight, the AUDUSD climbed toward the 0.70 price level with significantly choppy price action. For a continuation of the move to the upside, the AUDUSD would have to break above the 0.70 price level, with the next key resistance level at 0.7080.
Central Bank Notes:
- Cash rate stands at 3.35%
- Future rate rises are expected as RBA targets the 2-3% inflation target.
- Next meeting on 7 March 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 fluctuated strongly overnight as the price spiked up beyond 0.6350 briefly before retracing lower again. As the NZDUSD continues trading along the 0.63 price level, look for a potential break toward the upside, especially if the AUDUSD continues to trade higher. The correlation between the AUDUSD and NZDUSD could see the NZDUSD retest the near-term resistance level of 0.6380 before continuing the downtrend lower again.
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?
The USDJPY traded lower, down to the 131 price area, ad the DXY weakened overnight. However, while the USDJPY continues to trade above the 130 round number support level, the uptrend is likely to continue. Look for the USDJPY to break above the 131.50 price level to signal a continuation of the upside, with the immediate key resistance level at 132.65.
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
