What happened in the US session?
The banking crisis in the US remains the fundamental driver for volatility amid a lack of important data releases. Gold and the Swiss Franc were the primary beneficiaries as investors flocked to safe-haven assets.
What does it mean for the Asian Session?
The upcoming lower-than-expected US CPI data releases could aid the contagion fears surrounding the US banking sector to weaken the USD further despite the US regulators stepping in to alleviate the banking crisis.
The Dollar Index (DXY)
Key news events today
CPI m/m
CPI y/y
Core CPI m/m
What can we expect from DXY today?
US CPI m/m is forecasted to rise 0.4% (previous 0.5%) and y/y to fall to 6.0% (previous 6.4%). Core CPI m/m is expected to stay at 0.3%. Higher-than-expected figures could increase USD strength due to potentially rising interest rates, while lower figures could decrease USD value.
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
Bearish
Gold (XAU)
Key news events today
No major news events.
What can we expect from Gold today?
Gold, a safe-haven asset, experienced a surge in demand as investors sought to protect their wealth amidst the turmoil in the US banking sector. The aftermath following the announcement by the US Treasury and Fed to stem the crisis should continue to influence gold prices even in the face of the upcoming US CPI releases.
Next 24 Hours Bias
Bullish
The Australian Dollar (AUD)
Key news events today
No major news events.
What can we expect from AUD today?
A mixed reaction is expected for the AUD. A negative Westpac Consumer Sentiment (previous -6.9%) can lower spending, putting downward pressure on the AUD. A positive NAB Business Confidence (previous 6%) can boost investment, increasing demand for the AUD.
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
Mixed
The Kiwi Dollar (NZD)
Key news events today
No major news events.
What can we expect from NZD today?
The latest data of Visitor Arrivals m/m at -26.3% (previous 55.6%) represents a decrease in the number of visitors arriving in New Zealand from the last month, which could have a negative impact on the NZD.
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?
No major news event for JPY today, so the currency’s price direction is likely to be influenced by previously released data. The BSI Manufacturing Index, which shows the industry’s current state, was -10.5 (expected -4.2, previous -3.6). This suggests a decline in output and orders, which may negatively impact the JPY.
Central Bank Notes:
- The bank will continue with QQE with Yield Curve Control to achieve the price stability target of 2%
- Japan’s economy is expected to recover gradually
- The bank will not hesitate to take additional easing measures if necessary
- Next meeting is on 27 April 2023
Next 24 Hours Bias
Weak Bearish
The Euro (EUR)
Key news events today
No major news events.
What can we expect from EUR today?
The upcoming ECOFIN Meetings could impact the euro. Any significant announcements or decisions made during these meetings could affect the market’s perception of the eurozone economy, potentially leading to changes in the euro’s value.
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
Mixed
The Swiss Franc (CHF)
Key news events today
No major news events.
What can we expect from CHF today?
A lower-than-forecasted Swiss PPI m/m figure (0.5% vs previous 0.7%) could weaken CHF, indicating easing inflationary pressures and potentially less aggressive interest rate hikes by the SNB to contain price increases.
Central Bank Notes:
- Current policy rate is at 1.00%
- Next meeting on 23 March 2023
Next 24 Hours Bias
Weak Bearish
The Pound (GBP)
Key news events today
No major news events.
What can we expect from GBP today?
The Claimant Count Change is predicted to rise by 12.5K, compared to the previous decrease of 12.9 K. Additionally, the Average Earnings Index of 3m/y is expected to drop from 5.9% to 5.7%. This trend could signify a weaker labour market, potentially prompting the BoE to take a less aggressive approach to interest rate hikes or even to pause rate hikes altogether.
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 Bearish
The Canadian Dollar (CAD)
Key news events today
No major news events.
What can we expect from CAD today?
The forecasted data for Manufacturing Sales m/m shows a decrease of 0.4% compared to the previous data, which was a decline of 1.5%. This suggests that the manufacturing industry in Canada is recovering from the last slump, which could positively impact the CAD currency.
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
Weak Bullish
Oil
Key news events today
No major news events.
What can we expect from Oil today?
The US banking crisis has led to concerns about the availability of credit and the health of other US financial institutions. If more financial institutions suffer losses or fail, it could lead to a decrease in consumer confidence and a subsequent decrease in consumer spending, which would also impact oil demand.
Next 24 Hours Bias
Weak Bearish
