Subdued Trading in Asia as Dollar Continues its Declines

Explore subdued markets in Asia as the dollar declines. Analysis of currencies, gold, and oil. Critical insights for informed trading decisions.

US Session Recap

In the recent US session, economic indicators revealed a continued moderation in inflation, providing a potential push for a more dovish monetary policy stance by the Federal Reserve. The headline and core PCE Price Index readings eased, with the former dropping from 2.9% YoY to 2.6% and slowing down from 3.4% YoY to 3.2%. As per the University of Michigan’s final findings, consumer sentiment exhibited a 14% MoM increase, contributing to an overall improved sentiment, with inflation expectations falling from 4.1% YoY to 3.1%.

Despite this, the US Dollar Index (DXY) faced downward pressure, hitting a low of 101.45 before closing the week at 101.71, reflecting a trend of weakening demand for the dollar.

Asia Session Outlook

The Asia session will experience subdued trading volume and range for currency pairs as the holiday season continues. The DXY, opening at 101.65, is expected to drift lower, maintaining its recent trend.

Key News Events Today

There are no significant news events expected for the day.

USD (DXY) Forecast

The DXY has experienced a decline for five out of the last six weeks, losing 4.2% or 410 pips. With US inflation showing a downward trend and expectations of a dovish Federal Reserve, the DXY will likely continue drifting lower.

Central Bank Notes

The Federal Funds Rate target range remains unchanged at 5.25% to 5.50%, and the Federal Reserve emphasizes a commitment to achieving maximum employment and 2.0% inflation. The Federal Reserve has scheduled its next meeting for January 30-31, 2024.

Next 24 Hours Bias: Weak Bearish

Gold (XAU) Forecast

Spot gold prices reached $2,070/oz last week, driven by falling PCE inflation data in the US. Despite a retreat to $2,053/oz by the end of the week, analysts anticipate gold to maintain elevated levels as the demand for the dollar diminishes.

Next 24 Hours Bias: Medium Bullish

Subdued Trading in Asia as Dollar Continues its Declines

Australian Dollar (AUD) Forecast

The AUD hit a high of 0.6826, gaining 6.5% or 450 pips against the dollar over the past seven weeks. The AUD will likely stay elevated with a cash rate target unchanged at 4.35% and inflation concerns.

Next 24 Hours Bias: Medium Bullish

Kiwi Dollar (NZD) Forecast

The NZD hit 0.6318, gaining nearly 8% or 490 pips against the dollar over the past eight weeks. With the OCR unchanged at 5.50%, the NZD is expected to remain strong.

Next 24 Hours Bias: Strong Bullish

Japanese Yen (JPY) Forecast

Japan’s CPI remains stable. The Bank of Japan (BoJ) estimates a 3.0% year-on-year increase in its core CPI reading for November. A weaker-than-expected print could support USD/JPY after its recent drop.

Next 24 Hours Bias: Weak Bearish

Euro (EUR) Forecast

The Euro gained 4.2% or 450 pips in the past eight weeks, hitting 1.1041. Despite a slight pullback, the Euro is likely to remain elevated.

Next 24 Hours Bias: Weak, Bullish

Swiss Franc (CHF) Forecast

USD/CHF remains under heavy selling pressure, hitting a low of 0.8515. Expectations indicate that the CHF will drift lower with the policy rate at 1.75%.

Next 24 Hours Bias: Weak Bearish

Pound (GBP) Forecast

The Pound, ranging between 1.2620 and 1.2750, has been more volatile. Despite general dollar weakness, the Pound could slide lower.

Next 24 Hours Bias: Weak, Bullish

Canadian Dollar (CAD) Forecast

The Loonie has gained significantly, sending USD/CAD below 1.3300. Overhead pressures remain, and USD/CAD is likely to drift lower.

Next 24 Hours Bias: Weak Bearish

Oil Forecast

WTI oil breached $75 per barrel due to drone attacks in the Red Sea, making it the most significant gain since early October. Oil, trading at around $73.60, is expected to remain elevated.

Next 24 Hours Bias: Weak, Bullish

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