What happened in the US session?
The DXY saw significant volatility overnight as price fell towards the 110.30 price level following the BoJ intervention over the Yen. However, the move lower recovered, with the DXY ending the trading day at the 111 price level.
What does it mean for the Asia Session?
With no major news during the Asia session, look for the directional bias of the currencies to be driven by a potential recovery of the DXY.
The Dollar Index (DXY)
Key news events today
USD Flash Services PMI
What can we expect from DXY today?
The Federal Reserve hiked rates by 75bps, taking interest rates to 3.25%. This led to the DXY strengthening significantly to reach the 111.40 price level. In addition to the rate hike, Chair Powell commented that ‘ongoing increases will be appropriate’ and signaled a strong commitment to bringing down inflation despite a slowdown in the economy. These comments added to the overall hawkish sentiment for the DXY. With the Service PMI numbers tonight, we might expect an industry contraction with data less than 50.0 expected to weaken the USD briefly.
Central Bank Notes:
- Federal Reserve hikes rates by 75bps taking interest rates to 3.25%
- Next meeting on 3 November
- Further rate increases can be anticipated, with rate cuts expected only if Fed Reserve is confident inflation is moving back down to 2%
Next 24 Hours Bias
Weak Bullish
Gold (XAU)
Key news events today
No major news events.
What can we expect from Gold today?
Gold surged strongly to the upside, testing the 1680 resistance level as the DXY weakened briefly. However, the move higher was short lived as the resistance level held strong, resulting in Gold ending the trading session at the 1670 price level. Look for Gold to trade lower towards the 1655 support level as the DXY strengthens. Gold is expected to remain between the 1655 and 1680 price range
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 tested the 0.65830 support level and reversed from here. The reversal was because of the pullback of DXY. Anticipate further downside moves on the AUDUSD, with the key support level at 0.6530, especially if the DXY continues to strengthen. However, significant volatility can be expected with the AUDUSD trading lower into the historic low price levels.
Central Bank Notes:
- Further rate hikes are expected but the size will be dependent on upcoming data releases.
- Meeting on 4 October 2022
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 NZDUSD currently trades at the 0.5830 price level, the price is dropping back to the level before reversing. With yesterday’s negative trade balance data (-2447M), we could expect the price to drop to the key support level at 0.5810, and the downtrend is still firmly in place, more downside can be anticipated. The next key support level is 0.5600, which was last reached in 2020.
Central Bank Notes:
- Cash rate stands at 3.00%
- Central bank is likely to continue with the current path of rate adjustment
- Next meeting on 5 October 2022
Next 24 Hours Bias
Medium Bearish
The Japanese Yen (JPY)
Key news events today
No Major News Events
What can we expect from JPY today?
Today is a bank holiday for the Bank of Japan. Japanese banks will be closed in observance of Autumnal Equinox Day. Not expecting much movement for the Japanese Yen today in the markets. Yesterday Japan intervened in the forex markets, causing the Yen to slump 540 pips from 145.90 all the way down to 140.30. Look for a brief recovery of the USDJPY, retracing towards the 143 resistance level following the huge intervention movement yesterday.
Next 24 Hours Bias
Weak Bearish
