IC Markets Asia Fundamental Forecast | 18 January 2022

IC Markets No Comments

What happened in the US session?

The overnight session saw tepid moves amid a bank holiday in the US.

What does it mean for the Asia Session?

The main event for the day, the Bank of Japan’s Outlook Report, is not likely to bring much volatility to an otherwise light-data session.

The Dollar Index (DXY)

Key news events today

No major news events.

What can we expect from DXY today?

The lack of key currency-specific data releases for the day and news flows ahead of the US central bank meeting on 26 January are likely to see the greenback take the backseat, with news/data from other major counterparts to lead the way.

Central Bank Notes:

  • Taper pace increased to US30 billion from January; end in March 2022
  • Emphasised clear divide between tapering and rate lift-off
  • Next meeting on 26 January 2022

Next 24 Hours Bias

Mixed to Weak bullish

Gold (XAU)

Key news events today

No major news events. 

What can we expect from Gold today?

While no major news event/data releases are expected to impact the precious metal, the upcoming CPI data set from Germany, the UK, Canada, the Euro zone and Japan this week may provide renewed arguments for a flock to the inflation hedge amid global rising prices.

Next 24 Hours Bias

Mixed

The Australian Dollar (AUD)

Key news events today

No major news events.

What can we expect from AUD today?

The next key data release is on 20 January, when the labour data comes in, with an anticipated drop in employment change (expected 60k, previous 366.1k) and an improvement in unemployment rate (expected 4.5%, previous 4.6%).

Central Bank Notes:

  • Kept Cash Rate at 0.1%. and weekly bond purchases of AUD 4 billion per week until mid-February 2022.
  • A slower progress towards employment and inflation goals warrants a taper in February and review again in May.
  • Consider to raise rates only until actual inflation is sustainably within the 2%-3% target range. 
  • Next meeting on 1 February 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 Kiwi is still expected to lag the Aussie amid a lack of key currency-specific data releases for the week and news flows, possibly until RBNZ starts to be active on the wires to remind on its hawkish monetary policy directives.

Central Bank Notes:

  • Need to raise OCR to 2.6% by 2024, pending economic outlook
  • Downgrades GDP in 2022 and unemployment rate; upgrades to CPI and GDP in 2023
  • Considered a 50bps rate hike at the latest meeting but sees 25bp as a steady approach
  • Next meeting on 23 February 2022

Next 24 Hours Bias

Mixed to Weak Bearish

The Japanese Yen (JPY)

Key news events today

BOJ Outlook Report, Tentative

What can we expect from JPY today?

Japan could enter a quasi-state of emergency soon, following the Prime Minister’s decision to bring forward the booster shot period in order to avoid a serious shortage of hospital beds amid a rise in Omicron infections.

Central Bank Notes:

  • Retains its ultra-accommodative strategy
  • To scale back emergency pandemic relief funding from March 
  • Japan’s economy has picked up it does still remain in a severe situation due to the COVID-19.
  • Next meeting on 17 January 2022

Next 24 Hours Bias

Weak Bearish