What happened in the US session?
With the US markets closed for Labour day holidays, the DXY consolidated resulting in most major currencies consolidating at their respective interim levels.
What does it mean for the Asia Session?
Look for the DXY to recover and for the major currencies to continue with the previous trend. Major interest rate decision from the RBA is likely to bring some volatility to the AUDUSD.
The Dollar Index (DXY)
Key news events today
USD ISM Services PMI
What can we expect from DXY today?
The DXY consolidated along the 109.80 price level as the US banks were closed for Labour day holidays overnight. However, despite no key news release, the DXY gapped to the downside to reach the 109.45 price level early in the trading session. If price fails to climb higher above the 109.45 level, the DXY could fall further towards the 109 support level. However, look for potential recovery of the DXY from the 109.45 level to climb towards the 110 resistance level.
Central Bank Notes:
- Federal Reserve hiked rates by 75bps taking interest rates 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?
Gold spiked up above the 1720 price level following the brief downward move of the DXY early in the trading session. With the price currently retracing lower following the upward move, look for price action at the resistance level to signal the next potential move. A rejection of the resistance level and further strengthening of the DXY could see Gold trade lower towards the 1700 support level again. Watch out for choppy price movement on Gold as price trades towards the key support level.
Next 24 Hours Bias
Weak Bearish
The Australian Dollar (AUD)
Key news events today
AUD Cash Rate
AUD RBA Rate Statement
What can we expect from AUD today?
Overnight, the AUDUSD traded higher towards the 0.6830 price level, primarily due to the consolidation and brief weakness in the DXY. The AUDUSD is likely to face some volatility as markets stay poised for the RBA interest rate decision, anticipating a 50bps hike to be announced. However, from the previous 3 decisions to increase interest rates by 50bps, the AUDUSD subsequently traded lower. Therefore, look for a potential downward move on the AUDUSD following the upcoming decision, with the 0.6770 support level a possible target price.
Central Bank Notes:
- Possible 50bps rate hike to take interest rates to 2.35% in September 2022
- Meeting on 4 October 2022
Next 24 Hours Bias
Medium Bearish
The Kiwi Dollar (NZD)
Key news events today
No major news events.
What can we expect from NZD today?
The NZDUSD fails to trade lower with the DXY consolidating and the 0.6080 support level holding strong overnight. As the price failed to break lower, the NZDUSD bounced from the support to climb towards the 0.6140 resistance level. However, with the NZDUSD is still in a strong downtrend, the price is unlikely to sustain a significant move to the upside. Look for price to consolidate between 0.6080 and 0.6150 in the medium term as a directional bias develops. With the AUDUSD likely to experience some volatility due to the RBA rate decision today, expect to see some volatility for the NZDUSD too.
Central Bank Notes:
- Cash rate stands at 3.00%
- Central bank is likely to continue with the current path of rate adjustment
- Next meeting on 5 October 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 traded in a tight consolidation between 140.40 and 140.70 throughout the US session. However, early in the Asia session, the USDJPY broke lower to the 140.25 price level. With the DXY testing a near-term support level with a potential rebound, the USDJPY could follow and stage a rebound. Look for the price to break above the 140.70 price level to indicate a continuation of the uptrend. If the USDJPY climbs higher, the price could move towards the target level of 142, which is also the next key 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
