What happened in the US session?
The DXY consolidated below the 104 price level with the FOMC meeting minutes failing to provide more volatility. The S&P 500 closed slightly higher by 0.75% at the 3,852 price level.
What does it mean for the Asia Session?
The major currencies are likely to consolidate along the current level with higher volatility leading into the US session.
The Dollar Index (DXY)
Key news events today
USD FOMC Meeting Minutes
USD ADP Non-Farm Employment Change
What can we expect from DXY today?
Although the DXY traded lower early in the trading session, the move lower was retraced during the US session. The FOMC meeting minutes indicated that ‘further rate increases would be necessary’ and that ‘rate cuts shouldn’t happen in 2023’. This did not support the market anticipation that the Federal Reserve would pivot on its current monetary policy path. Look for the DXY to consolidate at the current price level with potential for further downside, with the next key support level at 103.22.
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 Bearish
Gold (XAU)
Key news events today
No major news events.
What can we expect from Gold today?
Overnight, Gold traded higher with choppy price action. Reaching a high of 1863 before retracing, the uptrend on Gold is likely to continue. Currently, at the 1856 price level, look for Gold to retrace to test the 1850 price level. If the price action indicates a rejection of the support level, Gold could continue trading higher ward the next key resistance level of 1900.
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?
Through yesterday’s trading session, the AUDUSD saw significant upside moves, with the price climbing toward the 0.69 round number resistance area. This move higher was driven by the news that China was looking into removing the ban on Australian coal. Currently trading at the 0.6817 price level, look for the AUDUSD to complete the retracement and resume the upward move, with the next key resistance levels at 0.69 and 0.7135.
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 Bullish
The Kiwi Dollar (NZD)
Key news events today
No major news events.
What can we expect from NZD today?
The NZDUSD traded with significant volatility as the price climbed higher toward the 0.6350 price area, but the move higher was quickly reversed as the NZDUSD ended the trading session just below the 0.63 round number support level. Anticipating strength in the DXY following the FOMC meeting minutes, the NZDUSD could trade lower from the current price of 0.6280, with the next key support level at 0.62.
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 traded higher through the trading session overnight as the price broke through the 131.50 price level to reach a near-term high of 132.65. This move higher was due to the strength of the DXY. However, currently the USDJPY is retracing briefly with the price testing the round number support of 132.00. With no major news events ahead, look for the retracement to complete and for the price to bounce off the support level to signal a continuation of the upward move, with the next key resistance level at 134.50.
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 Bearish
