What happened in the US session?
The major currencies traded with significant volatility following the release of key economic data for the US. As the DXY strengthened, most major currencies lost significant ground against the US greenback.
What does it mean for the Asia Session?
Look for prices to complete the retracement and break out of the consolidation to continue with the immediate trend.
The Dollar Index (DXY)
Key news events today
USD Core PCE Price Index m/m
What can we expect from DXY today?
The DXY traded higher overnight following the release of the advance GDP q/q data at 2.9% (Forecast: 2.6% Previous: 3.2%). With a higher-than-expected advance GDP, this showed steady growth in the US economy in the fourth quarter of 2022. The DXY traded up to the 102-round number resistance level. Look for further strength in the DXY, which would be signaled by the price breaking above the 102 price level and the release of the Core PCE price index, a key inflation indicator for the US Federal Reserve. However, the upside potential could be limited, with the previous swing high at 102.20 and the next key resistance 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 Bullish
Gold (XAU)
Key news events today
No major news events.
What can we expect from Gold today?
As the DXY strengthened overnight, Gold reversed strongly from the 1948 price level, trading lower toward the key support level of 1920. If the DXY continues to strengthen, further downside could be anticipated for Gold. Look for the price to break below the 1920 price level to signal a continuation of the correction lower, with the next key support level at 1900.
Next 24 Hours Bias
Medium Bearish
The Australian Dollar (AUD)
Key news events today
No major news events.
What can we expect from AUD today?
Through the trading session yesterday, the AUDUSD consolidated under the 0.7130 price level. A brief spike to the upside was sharply reversed following the recovery in strength of the DXY. The AUDUSD traded down to the 0.7080 price level before retracing again. If the DXY continues to strengthen, especially after the release of the Core PCE price index, the AUDUSD could reinforce the correction lower. Look for the price to break below the 0.71 price level to signal a possible move lower toward the key support level of 0.7045.
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?
The NZDUSD fluctuated along the 0.6490 price level as the volatility in the DXY increased following the release of the advance GDP data. The NZDUSD traded lower toward the 0.6455 price level, but failed to break the interim support level. Look for the NZDUSD to break below the 0.65 price level to indicate further downside potential, with the next key support level at the previous swing low of 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?
The USDJPY climbed steadily to the upside as the DXY strengthened. As the USDJPY failed to break above the 130.50 price level, the price has retraced briefly lower. Look for the completion of the retracement before potentially trading higher again, with the next key resistance level at 131.00. Alternatively, if the DXY reverses strongly into further weakness, the USDJPY could trade lower down to the key support level of 129.00.
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
Weak Bearish
