What happened in the US session?
The DXY traded along the 102 price level on Friday as the recent economic data release further reinforced the potential for a slowdown in future interest rate hikes. The S&P 500 closed slightly higher by 0.4%, just below the 3,999 price level.
What does it mean for the Asia Session?
Anticipate further weakness in the DXY to drive the major currencies higher. However, watch out for choppy price action with the US markets closed today for Martin Luther King Jr Day.
The Dollar Index (DXY)
Key news events today
No major news events.
What can we expect from DXY today?
Early in the trading session today, the DXY reversed strongly from the support and turned resistance and the price level of 102. The DXY has continued to weaken as a result of the stronger-than-anticipated UoM Consumer Sentiment on Friday which was released at 64.6 (Forecast: 60.8). This data indicated a resilient US economy which again signals the potential for a slowdown in the scale of future interest rate hikes. Currently trading at the 101.50 price area, look for further downside with the next key support level at the 101 round number support level and previous swing low from May 2022. Anticipate
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 the DXY continued to weaken, Gold climbed steadily to the upside, breaking strongly above the round number resistance level of 1900. Currently trading at the 1925 price level, further moves to the upside can be anticipated, especially if the DXY continues to weaken. The next key resistance level at 1955 is a potential target 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?
The AUDUSD currently trades above the 0.70 round number resistance level as the upward trend continues. Despite a lack of major news events for the AUD, the current upward momentum and weakness in the DXY are causing the AUDUSD to trade higher. Look for the AUDUSD to retrace briefly but continue with the overall climb higher, with the next key resistance level at 0.7130.
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 had been trading with choppy price action through the session on Friday as the price attempted to break above the 0.64 round number resistance level. Currently as the DXY weakens, the NZDUSD is trading at the 0.6420 price level with further upside anticipated. Look for the price to retrace briefly, testing the resistance turned support area of 0.64 before trading higher again, with the next key resistance level at 0.6515.
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
No major news events.
What can we expect from JPY today?
Following the news that the BoJ was set to review the side effects of its massive monetary easing policy, at the upcoming meeting on 18th January. Coupled with the weakness of the DXY, the USDJPY has continued to trade lower. Currently at the 127.40 price level, look for further downside with the next support level at the price area of 126.65.
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
