What happened in the US session?
The DXY traded with significant volatility overnight, while the S&P 500 closed 1.56% lower at 3,928.
What does it mean for the Asia Session?
Anticipate that most major currencies will continue trading with choppy price action.
The Dollar Index (DXY)
Key news events today
No major news events.
What can we expect from DXY today?
The DXY rose to the 102.65 price area before trading significantly lower, testing the key support level of 101.30. The move lower was unsustained as the price retraced sharply to end the trading session along the 102 price level. This wide fluctuation in price on the DXY was due to the weaker-than-expected retail sales data, followed by comments from US President Biden that the lower PPI data indicated that inflation growth was slowing down. Look for the DXY to consolidate along the 102 price level for the interim. If the price breaks above the 102.65 price level, the DXY could continue to climb higher to the next key resistance level of 103.
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?
The brief recovery in Gold as price climbed from 1897 up to 1925 was sharply reversed as the DXY recovered in strength overnight. Ending the session at the price area of 1900, the uptrend is still valid. However, if the DXY continues to strengthen, Gold could break below the 1900 round number support level to trade significantly lower. If Gold trades beyond the 1897 price level, the next key support level is at 1882.
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 climbed to reach a high of 0.7060 earlier in the trading session. However, with the recovery in strength of the DXY, the AUDUSD corrected sharply to the downside to trade along the 0.6950 price area. If the DXY continues to strengthen, look for the AUDUSD to break below the 0.6930 level to signal a continuation of the downward move, with the next key support level at 0.6875.
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 Bearish
The Kiwi Dollar (NZD)
Key news events today
No major news events.
What can we expect from NZD today?
In a similar price action to the AUDUSD, the NZDUSD climbed to a high of 0.6530 before trading significantly lower. Currently trading at the 0.6445 price level, the price action on the NZDUSD indicates the potential for a brief retracement to the upside before trading lower again. Look for the NZDUSD to test and reject the 0.6470 price level to indicate a continuation of the downtrend, with the next key support level at 0.6380.
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?
Yesterday, the BoJ disappointed markets as it released an unchanged monetary policy statement, despite indicating in the previous week that it could review the current stance in an ultra-easy monetary policy. This caused the USDJPY to spike strongly to the upside reaching a high of 131.50 before correcting significantly lower again. The recovery in strength of the DXY failed to bring the USDJPY higher as the price consolidated just below the 129-round number resistance level. Look for the price action to indicate a rejection of the resistance level, to trade lower to the key support level of 127.30.
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
