IC Markets Asia Fundamental Forecast | 28 June 2022
What happened in the US session?
The DXY traded lower overnight towards the 103.31 support level, driven lower due to the strength of the Euro, while most currencies held in a consolidation. US 10 year treasury yield rose as the market considered further rate hikes and increasing risk of recession.
What does it mean for the Asia Session?
As the DXY sits below the 103.80 resistance, look for hints for a directional bias. If DXY is able to break above the resistance, a recovery move higher could be possible.
The Dollar Index (DXY)
Key news events today
US Consumer Confidence
What can we expect from DXY today?
Overnight, the US posted a couple of better than expected data, in durable goods orders (Actual 0.7% Forecasted 0.1%) and pending home sales (Actual 0.7% Forecasted -3.5%). This strengthened the DXY briefly before retracing lower again.
Look for the DXY to continue trading below 103.80 with a possible recovery later into the US session with the release of the US Consumer Confidence data.
Central Bank Notes:
- Next meeting on 26 July 2022
- The committee hiked rates by 75bps, targeting inflation risk.
- Balance Sheet reduction plan to continue at $60b (treasuries) and $35b (MBS) over a three-month timeframe
Next 24 Hours Bias
Weak Bullish
Gold (XAU)
Key news events today
No major news events.
What can we expect from Gold today?
Gold rejected the 1840 price level, trading lower to 1825 as the news about the US joining the G7, imposing a ban on new Russian gold imports had a limited impact on prices. As gold fails to stage a stronger recovery, it is viewed that the market is now turning to the Federal Reserve and hints of their path for further policy adjustments, to provide a clearer direction for Gold price direction.
Anticipate a slight recovery back towards the 1830 price level amid more significant choppy price movements.
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?
With no major news events since the start of the week, the AUDUSD dropped lower following concerns on commodity prices but traded in a 30pip consolidation through trading sessions yesterday. The AUDUSD is likely to test the 0.6950 level before retracing lower towards recent support levels.
Central Bank Notes:
- Next meeting on 5 July 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 NZD tested resistance of 0.6322 through the trading sessions, failing to break higher. With no major news events scheduled, further upside move in the NZD seems to have stalled. Look for the NZDUSD to setup at current levels for a possible correction lower.
Central Bank Notes:
- Next meeting on 13 July 2022
Next 24 Hours Bias
Weak-to-Medium Bearish
The Japanese Yen (JPY)
Key news events today
No major news events.
What can we expect from JPY today?
The Yen continued to weaken, with the USDJPY rebounding from the 134.50 support level early in the trading day, to end up back at 135.50. Look for the Yen to continue weakening, and for the USDJPY to break above 135.50, towards 136. Beware that further price movements in the Yen are likely to experience deep retracements before leading up to a move higher.
Central Bank Notes:
- Kept all policy settings unchanged at their June meeting
- Reiterated that rates will stay low for the foreseeable future and won’t hesitate to add stimulus if the economy needs it
- Next meeting on 21 July 2022
Next 24 Hours Bias
Medium Bearish