What happened in the US session?
DXY retreated, following higher-than-expected Unemployment Claims (211k vs forecast 195k), from Tuesday’s rally underpinned by Fed Chair Powell’s hawkish testimony. The S&P 500 saw a significant drop due to risk aversion ahead of the US NFP.
What does it mean for the Asian Session?
The session’s highlight is the BOJ’s monetary policy decision, although the market does not expect any changes. The recent decline in USD/JPY may mask underlying expectations for potential hawkish surprises from Governor Kuroda’s final meeting.
The Dollar Index (DXY)
Key news events today
Average Hourly Earnings m/m
Non-Farm Employment Change
Unemployment Rate
What can we expect from DXY today?
The NFP is forecast at 224K, down from the previous 517K. Actual data below the forecast points towards slower job growth, negatively impacting the US dollar as the odds of a 50bps hike in the upcoming Fed interest rate decision may be diminished. The Average Hourly Earnings m/m (expected 0.3%, previous 0.3%) and Unemployment Rate (expected 3.4%, previous 3.4%) may have a more muted impact if they match the forecasts.
Central Bank Notes:
- The Committee has raised the federal funds rate target range to 4.5-4.75% and plans to continue increasing it to return inflation to 2%
- The Committee will monitor incoming information and adjust the stance of monetary policy as appropriate to achieve its goals
- A majority vote from the Committee supported the decision to raise the target range
- Next meeting is on 23 March 2023
Next 24 Hours Bias
Mixed
Gold (XAU)
Key news events today
No major news events.
What can we expect from Gold today?
A lower-than-expected US NFP (expected 217K, previous 517K) may lead to a rise in the non-interest-bearing gold since expectations of a 50bps hike at the upcoming Fed meeting would be lowered.
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?
Amid a lack of AUD-specific data releases, RBA Governor Lowe’s recent comments may influence AUD’s price. He discussed halting interest rate hikes due to more restrictive monetary policy but also emphasised the need for further tightening to achieve the inflation target.
Central Bank Notes:
- Cash rate raised by 25 basis points to 3.60%.
- Board prioritises returning inflation to target, with a likely need for further monetary policy tightening.
- Board to closely monitor the global economy, household spending trends, inflation and labour market outlook when assessing interest rate increases.
- Next meeting on 4 April 2023
Next 24 Hours Bias
Weak Bearish
The Kiwi Dollar (NZD)
Key news events today
No major news events.
What can we expect from NZD today?
The Manufacturing Sales q/q data has indicated a decline of -0.4% compared to the previous quarter’s growth of 5.0%. This contraction could lead to slower economic growth.
Central Bank Notes:
- Monetary Policy Committee increased the OCR from 4.25% to 4.75%
- Higher interest rates are needed to reduce inflation and support employment sustainably
- Severe storms in North Island will increase inflation and disrupt production.
- Next meeting is on 5 April 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 BOJ is expected to announce no significant changes to its monetary policy decision at Governor Kuroda’s last policy meeting. Kazuo Ueda has been approved as the next governor. The new leadership can potentially affect the yen’s value and the country’s economic outlook.
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
Mixed
The Euro (EUR)
Key news events today
No major news events.
What can we expect from EUR today?
German CPI m/m is forecast to rise 0.8% (previous 0.8%); meeting forecast could suggest stable inflation in Eurozone’s largest economy, supporting EUR. Moreover, French Trade Balance is expected to show a €14.0B deficit (previous €14.9B); meeting the forecast could indicate improving French exports, generally positive for EUR.
Central Bank Notes:
- Main Refinancing Rate is currently at 3.00%
- ECB Governing Council to continue raising interest rates and reducing holdings of securities
- Future policy decisions to be data-dependent
- Next meeting on 16 March 2023
Next 24 Hours Bias
Weak Bullish
The Swiss Franc (CHF)
Key news events today
No major news events.
What can we expect from CHF today?
As there are no significant news developments for CHF today, the price movement could be influenced by the recent speech made by the SNB Chairman, outlining the tightening of economic policy through interest rate adjustments and currency interventions aimed at stabilising prices.
Central Bank Notes:
- Current policy rate is at 1.00%
- Next meeting on 23 March 2023
Next 24 Hours Bias
Weak Bullish
The Pound (GBP)
Key news events today
GDP m/m
What can we expect from GBP today?
The UK’s upcoming GDP m/m data release is forecasted to grow by 0.1% (previous -0.5%), indicating a slight economic expansion. However, if the GDP growth falls short of expectations, the British Pound may weaken.
Central Bank Notes:
- MPC voted to increase Bank Rate by 0.5 percentage points to 4%
- Near-term data developments are crucial in assessing how quickly external and domestic inflationary pressures will abate
- MPC’s updated projections show CPI inflation falling back sharply from its current level
- Next meeting on 23 March 2023
Next 24 Hours Bias
Weak Bullish
The Canadian Dollar (CAD)
Key news events today
No major news events.
What can we expect from CAD today?
Weaker numbers are expected for CAD labour data, with the Employment Change expected to show a significantly smaller increase of 8.5K (previous 150K). At the same time, the Unemployment Rate is forecasted to increase to 5.1% (previous 5.0%).
Central Bank Notes:
- Bank of Canada maintains its target for the overnight rate at 4.5%
- Inflation eased in January, but price increases for food and shelter remain high
- BOC is prepared to increase the policy rate further to return inflation to the 2% target.
- Next meeting on 12 April 2023
Next 24 Hours Bias
Bearish
Oil
Key news events today
No major news events.
What can we expect from Oil today?
If the US NFP meets the forecast (expected 224K, previous 517K), the decrease in job growth is viewed as a sign of economic weakness, which could decrease demand for oil. However, the perceived hawkishness of the Fed may be reduced and cushion any drop in oil prices.
Next 24 Hours Bias
Weak Bearish
