US Dollar, DXY, RBNZ, Crude Oil, Energy, Market Sentiment – TALKING POINTS
- Asia-Pacific markets may rise after mostly positive Wall Street session, USD softness
- RBNZ set to deliver a 50-basis-point OCR hike and quarterly Monetary Policy Statement
- US Dollar DXY prices trim intraday gains after prices rose to a familiar resistance level
Wednesday’s Asia-Pacific Outlook
Asia-Pacific markets may trade higher after US Dollar strength paused overnight as US stocks trimmed gains and closed mostly higher. The Reserve Bank of New Zealand (RBNZ) is expected to hike its official cash rate (OCR) by 50-basis-points today at 02:00 GMT. The central bank’s monetary policy statement will receive a quarterly update. NZD/USD fell around 0.3% overnight. However, the RBNZ’s OCR projection may increase from May, which could bolster the Kiwi Dollar.
Brent crude oil prices fell to the lowest levels since February, weighed down by Chinese factory lockdowns and the potential for Iranian oil to return to the global market. China’s Sichuan province ordered most factories to close through Saturday as a crippling heat wave strains the energy grid. Europe saw another increase in natural gas prices amid protracted drought conditions despite positive developments to import more gas. Germany announced a deal with two companies to provide floating liquified natural gas terminals.
Zinc prices rose after Nyrstar announced the temporary closure of its Budel smelting plant in the Netherlands. That is one of Europe’s largest smelters, although it was already running at reduced capacity, along with other smelters across Europe. The high energy prices across the continent have made it unprofitable to operate those plants.
Gold prices traded lower even after the US Dollar trimmed most of its gains. XAU/USD’s 50-day Simple Moving Average capped an intraday bout of strength. Silver prices were lower as well. Wheat and corn prices fell in Chicago after rains across the US Midwest likely improved crop conditions. Meanwhile, cargo ships continue to ship cargo out of Ukraine’s Odesa seaport. Japan’s July balance of trade is seen remaining in deficit, caused by high energy prices and a relatively weak Yen. Australia’s Westpac leading index for July will provide another data point that may influence FX markets.
Notable Events for August 17:
Singapore – Non-Oil Exports MoM (July)
Australia – Wage Price Index YoY (Q2)
Australia – Westpac Leading Index MoM (July)
DXY Technical Outlook
DXY prices failed to clear the 38.2% Fibonacci retracement after trimming intraday strength, but the outlook remains constructive above the 20- and 50-day Simple Moving Averages (SMA). The August high at 106.94 appears to have a healthy amount of sellers near the level, as early August trading saw several intraday selloffs around 106.9. Earlier this month, MACD crossed below its signal line on the weekly chart and continues to track lower, signaling waning momentum that may drag prices lower from its July 2022 high.
DXY Daily Chart
Chart created with TradingView
— Written by Thomas Westwater, Analyst for DailyFX.com
To contact Thomas, use the comments section below or @FxWestwater on Twitter