What happened in the US session?
Overnight, As the US returned from the bank holiday, market liquidity and volatility increased with the US Dollar gaining briefly. The equity markets closed slightly lower by -0.20% at the 3,990 price level.
What does it mean for the Asia Session?
Look for increased volatility on the Japanese Yen with the Bank of Japan due to release its monetary policy statement today.
The Dollar Index (DXY)
Key news events today
USD Core PPI m/m
USD Core Retail Sales m/m
USD PPI m/m
USD Retail Sales m/m
What can we expect from DXY today?
Earlier in the trading session yesterday, the DXY broke below the 102 round number support level to trade significantly lower, down to the 101.70 price area. However, the move to the downside was sharply reversed during the US session with the price trading back toward the 102.00 price level. Data for the US Core Retail Sales (Forecast: -0.5% Previous: -0.2%) and Retail Sales (Forecast: -0.8% Previous: -0.6%) is due to be released today and is anticipated to be weaker than previous. This could lead to further weakness in the DXY, with the price likely to reverse strongly from the 102 price area, down to the price area of 101.55, which is also the key support level.
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?
As Gold reversed from the 1928 resistance level, the price consolidated along the 1910 price level despite the strength of the DXY. If the DXY continues to weaken, Gold could break out of the current consolidation to trade higher, continuing with the current uptrend. However, look for Gold to break above the 1915 price level to signal upside potential, with the next key resistance level at the 1928 level.
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?
Overnight, the AUDUSD traded with choppy price action as the currency traded lower to the 0.6930 price level briefly. However, the move lower was sharply retraced, with the AUDUSD rebounding to trade toward the 0.70 price area. Look for the AUDUSD to break above the round number resistance level of 0.70 to indicate a continuation of the uptrend, with the next key resistance level at 0.7140.
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?
Yesterday, the NZDUSD broke out of the consolidation and the resistance level of 0.64 and climbed significantly higher. Early in the trading session today, with the DXY indicating a retracement to the downside, the NZDUSD has continued to climb higher and is currently trading at the 0.6445 price level. Look for further upside on the NZDUSD if the DXY continues to weaken, with the next key resistance level at 0.6525.
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 Bullish
The Japanese Yen (JPY)
Key news events today
JPY BoJ Outlook Report
JPY Monetary Policy Statement
JPY BoJ Press Conference
What can we expect from JPY today?
Overnight, the USDJPY The USDJPY traded briefly higher from the 128.30 price level to reach a high of 129.10. Today, the BoJ is due to release its decision through the monetary policy statement, with markets expecting the BoJ to indicate an adjustment to the current monetary policy. A tightening of the current monetary policy would strengthen the Yen significantly. With the price currently trading at the 128.70 price level, look for further downside potential if the Yen strengthens. If the price breaks below the 128-round number level, the USDJPY could continue to slide to the key support level of 126.00.
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
Medium Bullish
