IC Markets Asia Fundamental Forecast | 05 August 2022

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What happened in the US session?

The DXY saw a brief upside move as the GBP slid against the US Dollar following the BoE rate decision. As the fears of a global economic slowdown increased, the US equity markets retraced to close slightly lower.

What does it mean for the Asia Session?

With the US employment data to be released today, markets could trade in a tight consolidation during the Asia session, in the lead-up to the news event. 

The Dollar Index (DXY)

Key news events today

USD Average Hourly Earnings m/m

USD Non-Farm Employment Change

USD Unemployment Rate

What can we expect from DXY today?

Overnight, the DXY retraced from the 106.40 level to retest the near-term support of 105.55. The weakness in the DXY was despite comments from Federal Reserve member Mester, indicating that the US was not in a recession now and that it was “not unreasonable to think Fed might hike by 75bps in Sept”. Look for the DXY to find support at this 105.55 level, with upside potential dependent on the Non-Farm employment change (Forecast: 250K  Previous: 372K) data to be released today.  

Central Bank Notes:

  • Hiked rates by 75bps to take Federal Funds Rate to 2.50%
  • Next meeting on 22 September 2022
  • 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?

On the back of the DXY weakness overnight, Gold climbed steadily higher to break above the 1770 resistance level to reach 1790. Look for some short-term retracement to the 1780 price area before a resumption of the uptrend towards the next key resistance area, the 1807 price level. 

Next 24 Hours Bias

Weak Bullish

The Australian Dollar (AUD)

Key news events today

AUD RBA Monetary Policy Statement

What can we expect from AUD today?

The release of the RBA monetary policy statement had little impact on the AUDUSD. The AUDUSD currently trades at 0.6967 and is likely to remain within the range of 0.6945 and 0.6990 today. A weaker than forecasted Non-Farm employment change data from the US today could see the AUDUSD break out of the range to trade higher, towards the next resistance level of 0.7050.

Central Bank Notes:

  • Possible 25 to 50bps rate hike
  • Meeting on 6 September 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?

Through yesterday’s trading session, the NZDUSD has been trading along the 0.6295 price level, with no clear directional bias. Further upside potential seems limited for the NZDUSD, with price action showing strong resistance to move higher. Look for a deeper move lower, especially if the US NFP data is released stronger than expected. The price will need to break below 0.6270 to signal further downside, towards the 0.62 support level.

Central Bank Notes:

  • Cash rate stands at 2.50% following a 50bps rate hike in the July meeting
  • Expects near-term inflation to rise with lower economic activity
  • Next meeting on 17 August 2022

Next 24 Hours Bias

Medium Bearish

The Japanese Yen (JPY)

Key news events today

No major news events

What can we expect from JPY today?

The USDJPY retraced to test the 132.50 support level, moving with similar price action to the DXY. Look for a resumption of the upside on the USDJPY, if the price is able to close above 133.30 to climb towards the 134.50 resistance level. Further move higher will require the price to break upwards from the resistance level, to trade towards 136.00 as the next resistance level.

Central Bank Notes:

  • Policy settings were unchanged with rates kept at -0.10%
  • 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 22 September 2022

Next 24 Hours Bias

Medium Bearish