IC Markets Asia Fundamental Forecast | 09 August 2022

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What happened in the US session?

Overall, markets were trading with lower volatility, in the leadup to the US inflation data on Wednesday. Most currencies traded relatively unchanged.

 

What does it mean for the Asia Session?

Prices are likely to consolidate for the second day running, as the lack of major news events keeps market volatility lower. 

The Dollar Index (DXY)

Key news events today

No major news events.

What can we expect from DXY today?

The DXY traded slightly lower to rest at the 106.25 price level. The DXY could continue to consolidate at this level with market volatility currently lower. However, look for a potential move to the upside and to the 107 resistance level, if price is able to close above 106.50.

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 climbed to test the 1790 resistance level again. However, the price looks to be rejecting the resistance area, potentially forming a double top reversal pattern. Look for price to trade lower, with significant strength towards the near-term support level of 1750.

Next 24 Hours Bias

Weak Bearish

The Australian Dollar (AUD)

Key news events today

No major news events.

What can we expect from AUD today?

The AUDUSD rose to the 0.70 resistance level overnight as the price volatility continues to be trapped between the 0.69 and 0.70 price range. With no major news events today, the AUDUSD is likely to maintain within this range. Look for the price to trade lower towards the 0.69 support level again.

Central Bank Notes:

  • Possible 25 to 50bps rate hike
  • Meeting on 6 September 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 bounced from 0.6235 to climb towards near-term resistance of 0.63. However, the price action of the NZDUSD at the resistance level signals that the retracement has been completed, and a potential resumption of the downtrend is likely. If the price is able to close below 0.6270, look for the NZDUSD to trade lower towards the 0.62 support area. 

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

Weak Bearish

The Japanese Yen (JPY)

Key news events today

No major news events.

What can we expect from JPY today?

With no major news events overnight, the USDJPY saw lower volatility. The price movement traded slightly lower from 135.30 to 134.45. Look for the USDJPY to weaken to test the 134.00 round number support before a possible bounce towards the upside. However, a bounce on the USDJPY would depend on a sustained recovery of the DXY.

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

Weak Bearish