IC Markets Asia Fundamental Forecast | 29 November 2022
What happened in the US session?
During the US session, the DXY fluctuated strongly between the 105.40 and 106.65 price range. The S&P500 closed lower by 1.54% as covid unrest in China casts more uncertainty.
What does it mean for the Asia Session?
Look for increased volatility with the major currencies to gain against the Greenback as the DXY reverses from the overnight high.
The Dollar Index (DXY)
Key news events today
USD CB Consumer Confidence
What can we expect from DXY today?
The DXY fluctuated strongly overnight as markets returned after the Thanksgiving weekend. Comments from Federal Reserve members provided mixed sentiments as member Bullard stated that the “Fed will have to pursue rate hikes into 2023” whilst member Barkin indicated that he was supportive of a rate path that was “slower, longer but potentially higher.” The DXY currently trades at 106.20 as it reverses from the recent high of 106.65, with further downside potential toward the key support level of 105.40 likely.
Central Bank Notes:
- Federal Reserve hiked rates by 75bps taking interest rates to 4.00%
- Next meeting is on 15 December 2022
- Further rate increases can be anticipated, with rate cuts expected only if Fed Reserve is confident inflation is moving back down to 2%
Next 24 Hours Bias
Medium Bearish
Gold (XAU)
Key news events today
No major news events.
What can we expect from Gold today?
Gold traded with little volatility despite the overnight fluctuation of the DXY, with the price maintaining around the 1750 price level. Look for a potential breakout on Gold, if the price is able to trade above the 1760 level, with the next key resistance level at 1785. However, for Gold to trade sustainably higher, it is anticipated that the DXY would have to weaken back down to the 105.40 price 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 had similar price action to the NZDUSD as the price reversed strongly from the 0.67 round number resistance level to trade lower toward the 0.6645 price level due to the brief strengthening of the DXY overnight. As the DXY retraces to the downside, the AUDUSD has rebounded and currently trades higher, back at the 0.67 price level. Look for the price to break above 0.67 to signal a stronger reversal, with the next key resistance level at 0.6780.
Central Bank Notes:
- Cash rate stands at 2.85%
- Future rate rises will be determined by data, the outlook for inflation, and the labour market.
- Next meeting on 6 December 2022
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 significantly lower overnight, reversing from the interim resistance level of 0.6240 to reach a near term low of 0.6160. However, this move lower has been quickly reversed early in the trading session today, as the NZDUSD bounced strongly to the upside, with the current price of 0.6220. Look for the NZDUSD to continue trading higher if the DXY continues to weaken with the next key resistance at 0.6290.
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?
The USDJPY traded lower overnight, reaching the 137.50 price level before retracing back toward the 139 level again. This fluctuation was due to the volatility in the DXY. As the price rejects the 139 round number resistance level, price action on the USDJPY signals the potential for further downside. Look for the USDJPY to break below 138 to trade lower toward the 137.50 interim support, with the next key support level at 134.
Central Bank Notes:
- Cash rate stands at -0.1%
- Expects Short- And Long-Term Policy Rates To Remain At ‘Present Or Lower’ Levels
- Next meeting is on 20 December 2022
Next 24 Hours Bias
Medium Bullish