IC Markets Asia Fundamental Forecast | 05 October 2022

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What happened in the US session?

The US dollar continued to weaken as the other major currencies gained against the USD, with the S&P closing stronger, up by 3%. 

What does it mean for the Asia Session?

Focus on the NZDUSD following the decision from the RBNZ to increase rates by 50bps and with the price testing the 0.58 resistance level. 

The Dollar Index (DXY)

Key news events today

USD ADP Non-Farm Employment Change

USD ISM Services PMI

What can we expect from DXY today?

The DXY continued to slide overnight as price fell towards the 110 key support level. Despite a lack of significant key news events, the move lower on the DXY is likely to be driven by a technical retracement to the downside and the recovery of strength on the EURUSD and the GBPUSD. If the DXY is likely to consolidate at this strong support level. However, if the price breaks strongly below 110, the next key support level is at 109. 

Central Bank Notes:

  • Federal Reserve hiked rates by 75bps taking interest rates to 3.25%
  • Next meeting on 3 November 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

Weak Bearish 

Gold (XAU)

Key news events today

No major news events. 

What can we expect from Gold today?

As the DXY weakened towards the key support level, Gold climbed steadily, breaking through several resistance levels to approach the 1735 resistance area. Gold is likely to retrace briefly from this level to test the 1700 round number support level. However, with the recent upward trend, if Gold breaks above 1735, the next key resistance level is at 1763. 

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 traded lower on release of the RBA interest rate decision, taking the cash rate to 2.60%. However, the move lower was brief as the AUDUSD surged upwards to towards the 0.6550 resistance level due to the overnight weakness in the DXY. However, the move higher was unsustained, with the AUDUSD reversing sharply. As the price stays below 0.6525, the AUDUSD is likely to continue trading between 0.6440 and 0.6525 in the interim. Further downside on the AUDUSD can be expected if the DXY recovers in strength.

Central Bank Notes:

  • Cash rate stands at 2.60% 
  • Future rate rises will be determined by data, outlook for inflation and the labour market.
  • Next meeting on 1 November 2022

Next 24 Hours Bias

Weak Bearish

The Kiwi Dollar (NZD)

Key news events today

NZD Official Cash Rate

NZD RBNZ Rate Statement

What can we expect from NZD today?

The Reserve Bank of New Zealand (RBNZ) increased rates by 50bps taking the cash rate to 3.50%. However, as the accompanying statement indicated that the committee considered a 75bps rate hike, the NZDUSD spiked higher, reaching a high of 0.58. If the DXY continues to weaken, look for the NZDUSD to break above the 0.58 resistance level to signal a more sustained move to the upside, with the next key resistance level at 0.5940.

Central Bank Notes:

  • Cash rate stands at 3.50% 
  • Central bank is likely to continue with the current path of rate adjustment
  • Next meeting on 23 November 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?

Overnight, the USDJPY pair bounced off the crucial 145 resistance level and traded significantly lower to reach the key support level at 143.80. Currently, the USDJPY has bounced off the support level and is trading at 144. If the USDJPY continues to climb, price is likely to fluctuate between the price level of 144 and 145. However, if the price breaks below 143.80, the next support level is at 142.60.

 

Next 24 Hours Bias

Weak Bearish