IC Markets Asia Fundamental Forecast | 16 August 2022

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What happened in the US session?

The US dollar continued to strengthen, gaining against most major currencies. The equity markets closed slightly higher building on its four-week win streak.

What does it mean for the Asia Session?

Prices could retrace briefly before trading lower again if the DXY continues to strengthen through the daily trading session.

The Dollar Index (DXY)

Key news events today

No major news events. 

What can we expect from DXY today?

The DXY climbed steadily higher towards the key resistance area of 106.50. With no major news events for the US, the DXY could retrace briefly before trading higher again. Look for the price to bounce off the 106 area, and if the price closes above 106.50, the next key resistance area is at 107.30.

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

Medium Bullish

Gold (XAU)

Key news events today

No major news events. 

What can we expect from Gold today?

The overnight correction in Gold brought the price lower towards the 1770 support area. With Gold currently trading at 1780, look for a potential rebound towards the 1790 price area before a possible retest of the support level again. If the price breaks below 1770, the next key support area is at 1750. 

Next 24 Hours Bias

Weak Bearish

The Australian Dollar (AUD)

Key news events today

AUD Monetary Policy Meeting Minutes

What can we expect from AUD today?

Following the AUDUSD’s consolidation at the resistance area of 0.7145, the AUDUSD traded significantly lower overnight, to break below the 0.7050 support level. Look for this downtrend to continue towards the 0.6960 key support level. As the release of the monetary policy meeting minutes did not surprise markets, look for the AUDUSUD to retrace briefly towards the near-term resistance level of 0.7050 before resuming the downtrend.

Central Bank Notes:

  • Possible 25 to 50bps rate hike
  • Meeting on 6 September 2022

Next 24 Hours Bias

Weak Bearish

The Kiwi Dollar (NZD)

Key news events today

No major news events.

What can we expect from NZD today?

The NZDUSD reversed significantly from the key resistance level of 0.6465. The kiwi slid below the 0.64 round number support to reach the 0.6350 interim support level in the lead-up to the RBNZ interest rate decision on Wednesday. With the markets expecting a dovish rate hike, a move to the downside can be expected for the NZDUSD. Look for the price to break below the 0.6350 level to signal a further confirmation of the downtrend, with 0.63 and 0.6230 the next key support levels. 

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 Medium 

The Japanese Yen (JPY)

Key news events today

No major news events.

What can we expect from JPY today?

The USDJPY briefly tested the 132.50 support level before retracing higher towards the 133 price level. Expecting the DXY to strengthen further, look for the USDJPY to consolidate below the 133.60 price level before a potential break towards the upside. If the USDJPY closes above 133.60, the price could climb higher towards the next key resistance level of 135.00.

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