What happened in the US session?
The DXY traded significantly lower despite strong employment data on Friday, as markets look to the possibility of lower terminal rates. The S&P 500 closed considerably higher by 2.28%.
What does it mean for the Asia Session?
Look for the major currencies to continue gaining against the DXY, with the US dollar expected to continue weakening briefly.
The Dollar Index (DXY)
Key news events today
No major news events.
What can we expect from DXY today?
On Friday, the US employment data was released with the unemployment rate falling to 3.5% (Expected: 3.7%) and the non-farm employment change at 223k (Forecast: 200k). However, despite the positive employment data, the DXY failed to strengthen but instead weakened significantly. This was due to the reduced expectations for how high the Federal Reserve could hike interest rates in the future. Currently trading at the 103.31 price level, look for the DXY to break below the 103 price level to signal further downside potential, with the next key support level at 102.50.
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 Bearish
Gold (XAU)
Key news events today
No major news events.
What can we expect from Gold today?
Gold climbed strongly on Friday as the DXY weakened as the price broke out of the brief consolidation at the 1840 price level. Gold climbed toward the 1870 price level by the end of the trading week, with the current price action indicating the potential for further upside potential. Currently trading at the 1878 price, look for Gold to break above the 1880 price level to indicate 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?
As the DXY weakened, the AUDUSD traded higher to reach the key resistance level of 0.6890. The AUDUSD ended the trading week below the 0.69 round number level, but if the DXY continues to weaken, further upside could be expected for the AUDUSD. Look for the price to break above the 0.69 price level to signal a continuation of the upside, with the next key resistance level at 0.7130. Alternatively, if the AUDUSD fails to trade higher strongly, the price could retrace lower, back towards the 0.68 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 Bullish
The Kiwi Dollar (NZD)
Key news events today
No major news events.
What can we expect from NZD today?
The NZDUSD bounced strongly from the round number support level of 0.62 to trade beyond the key resistance level of 0.6350 on Friday. Currently trading at the 0.6380 price level, further upside is anticipated for the NZDUSD. Look for the price to break above the 0.64 price level to signal a continuation of the uptrend, with the next key resistance level at 0.6480.
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 reversed strongly after reaching the high of 134.80 to trade significantly lower, ending the trading week at the key support level and price area of 131.60. This downward move was due to the weakness of the DXY. If the DXY continues to weaken, look for the USDJPY to break below the 131.50 price level to signal a continuation of the downside potential, with the next key support level at the price area of 130.00.
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 Bullish
