IC Markets Asia Fundamental Forecast | 18 August 2022

IC Markets No Comments

What happened in the US session?

The US dollar climbed towards the 106.70 resistance before retracing lower. The major currencies lost ground against the USD but ended the trading session in a tight consolidation at the near-term support levels.

What does it mean for the Asia Session?

Most major currency pairs are likely to continue trading in consolidation with downside potential. Look for possible volatility in the AUDUSD and Gold during the Asia session. 

The Dollar Index (DXY)

Key news events today

USD FOMC Meeting Minutes

What can we expect from DXY today?

The FOMC meeting minutes indicated members’ concern over further rate increases and its impact on the economy. But also highlighted that the Federal Reserve saw continual interest rate hikes until substantial easing in inflation is seen. The DXY climbed to the 106.70 resistance level before retracing to consolidate at the 106.50 price level. Look for further upside on the DXY with the 107.30 resistance a possible target 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 continued its slide overnight with price breaking below the 1770 support level on the back of the DXY’s climb towards the 106.50 price level. For a continuation of the downward move, look for Gold price to close below the 1760 price level. The next key support levels are at 1750 and 1731.  

Next 24 Hours Bias

Weak Bearish

The Australian Dollar (AUD)

Key news events today

AUD Employment Change
AUD Unemployment Rate

What can we expect from AUD today?

The AUDUSD traded lower on the release of employment data today. With employment change at -40.9K (Forecast: 26.5K) and the unemployment rate dropping slightly from 3.5% to 3.4%, further weakness in the AUDUSD can be expected. However, before further downside, the AUDUSD could retest the near-term resistance first. Look for the price to reject the 0.6945 resistance area to signal further downside potential towards the next support level of 0.6850.

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?

Following the RBNZ’s decision to raise rates to 3.00%, the NZDUSD traded lower from the 0.6330 level to the 0.6270 price area. With no major news events today, the NZDUSD could continue to consolidate just below the 0.63 resistance level. For further downside confirmation, look for the price to close below 0.6260, with the next key support level at 0.6180.

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

Weak Bearish

The Japanese Yen (JPY)

Key news events today

No major news events.

What can we expect from JPY today?

The USDJPY broke above near-term resistance of 134.50 to reach the 135.50 area. The move higher was driven by the brief strength in the DXY overnight. However, as the DXY consolidates in the 106.50 area, look for the USDJPY to retrace towards the 134.50 level before further upside. If the price breaks above 135.50, look for the price to continue climbing towards the next resistance of 137.50. 

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