IC Markets Asia Fundamental Forecast | 29 June 2022
What happened in the US session?
The US dollar strengthened against all major currencies as the DXY rebounded from the 103.80 level towards 104. This boost was driven on the back of comments from the Federal Reserve member Williams, stating that the ‘US economy is strong, financial conditions have tightened’ and that a recession in the US was not his base case. This brought further confidence to the market as he signalled that the path of Fed Funds Rate would reach 3.5% to 4%.
What does it mean for the Asia Session?
The DXY could strengthen more from the 104 level in the Asia session driven by the overnight momentum. However markets are now focussed on the possible signals from the ECB Forum where 3 central bankers will be speaking.
The Dollar Index (DXY)
Key news events today
US Final GDP q/q
Fed Chair Powell Speaks
What can we expect from DXY today?
Although consumer confidence data for the US was released at 98.7 (expected: 100), indicating that households were more pessimistic about their income outlook, the US dollar gained across the board.
Attention of the markets now shifts towards the US GDP data release and the speech from Fed Chair Powell, to provide a further indication of the US economic performance and policy path. Anticipate hawkish Fed sentiment to drive the DXY higher from the 104 support level, to test immediate resistance level of 104.50.
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
Medium Bullish
Gold (XAU)
Key news events today
No major news events.
What can we expect from Gold today?
Early in yesterday’s trading session, gold recovered to the 1829.50 level briefly before trading lower through the US session, taken down because of the US dollar recovery.
Although further US dollar strength is expected today, Gold could rebound from the 1818 level, back towards near term resistance of 1829.50.
Next 24 Hours Bias
Weak Bullish
The Australian Dollar (AUD)
Key news events today
AUD Retail Sales m/m
What can we expect from AUD today?
Retail sales data for Australia was released indicating a 0.9% month-on-month increase. Together with the news of China easing quarantine restrictions some upside was evident on the AUD early in the trading session today. However, a more significant move to the upside could be limited, with the 0.6940 resistance near
Look for a short term retrace in the AUDUSD before a move lower again, towards the 0.6870 level.
Central Bank Notes:
- Next meeting on 5 July 2022
Next 24 Hours Bias
Medium Bearish
The Kiwi Dollar (NZD)
Key news events today
RBNZ Statement of Intent
What can we expect from NZD today?
The NZD dropped significantly through the US trading session, as the NZDUSD rejected resistance of 0.6322 to the support level of 0.6235. Similar to the AUD, the NZD is currently retracing from this key support level, but look for further downside after this retrace, for a move to test 0.6235 support level and lower.
Central Bank Notes:
- Next meeting on 13 July 2022
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?
With the US dollar strength overnight, the USDJPY was taken higher from 135.50 towards the resistance of 136 and slightly beyond. As the BoJ maintains its dovish stance, the Yen is likely to find 136 as a base for a further move higher.
If Fed Chair Powell does signal a more hawkish sentiment, look for the Yen to lose further ground against the other major currencies, with the USDJPY testing the 137 level.
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