Optimism on Wall Street significantly affected government bond yields and the US dollar. Today, the Fed will announce its rate decision. The US dollar index was rather volatile, moving in the range of 102.0-102.2.

Sharp price fluctuations in a very narrow corridor clearly indicate mixed market sentiment. Yesterday, the greenback fell to 102 due to weak data on wage growth and home prices.

In the Asian session, the US dollar index was trading at 102.1 against its main rivals. Its consolidation will last until the Fed’s rate decision. The regulator will announce it two hours before the end of the US session.

The dollar/yen pair is also hesitant to pick up a trajectory. As traders are cautious ahead of the Fed meeting, the pair looks weak. Its growth is not as impressive as it was on Monday and even Tuesday. Back then, the bullish sentiment was stronger.

At the start of the week, the media reported that Yuri Okina, the chairman of the Japan Research Institute, could become the first female deputy governor in BOJ history. She is the vocal opponent of the ultra-soft monetary policy. The yen climbed amid the likelihood of her appointment.

In its economic outlook for 2023, the International Monetary Fund called Japan the largest industrial manufacturer. Japan’s real GDP growth is projected at 1.8%, which is far ahead of other countries.

Yet, the yen failed to retain an upward movement. Its trajectory will largely depend on the Fed’s rate decision. Besides, it is sensitive to US Treasuries, which are now growing.

After a pullback from the weekly high, the yen is hovering near 130. It is trading in the range of 129.8-130.4. However, after the Fed meeting, dollar bulls may take advantage.

In the morning, they pushed the pair to 130.3. Overall, the sentiment is moderately bearish with 57% of traders out of 43% expecting the yen to climb. If so, yen bulls may quickly return the price to the support level of 129.5. In this case, the downtrend will prevail.


The Australian dollar, which usually rises along with Wall Street, has advanced today as well. It also gained momentum thanks to data from China. The Manufacturing PMI Index in January climbed markedly and exceeded forecasts.

Oil prices moved up as well amid the recovery of the Chinese economy. This is another bullish factor for commodity currencies. In the Asian session, the Aussie kept climbing. It reached 0.7083.

In Australia, the Consumer Price Index jumped to 7.8% in December. It means that inflation has not peaked yet. Nevertheless, analysts do not expect the RBA to change its stance.

The futures market shows that traders are counting on a 25 basis point rate hike. Therefore, the main driving force for the pair remains the greenback and its movements after the Fed meeting. The pair started the day with a moderate increase in the range of 0.7036-0.7086.

In New Zealand, inflation has already passed its peak. In addition, the labor market also remains stable. The unemployment rate amounted to 3.3%. It reinforced expectations that the Reserve Bank of New Zealand could raise the key rate less aggressively later this month.

The upward movement of the New Zealand dollar is somewhat limited today because of these prospects. However, in the morning, it advanced amid the same drivers as the Aussie did. The NZD/USD pair was moving in the price corridor of 0.6417-0.6452. It was trading at 0.6450.

00:00 Intro
00:28 CME FEDWATCH TOOL
01:47 USDX
02:36 USD/JPY
04:47 AUD/USD
06:12 NZD/USD

https://www.instaforex.com

FX Analytics - https://www.instaforex.com/forex_analytics
Forex Calendar - https://www.instaforex.com/forex_calendar
Forex TV from InstaForex - https://www.instaforex.com/instaforex_tv

Forex charts - https://www.instaforex.com/charts
Instant account opening - https://www.instaforex.com/fast_open_live_account
Forex Trading Contests - https://www.instaforex.com/forex_contests

List of official InstaForex blogs:
https://www.facebook.com/instaforex
https://www.instagram.com/instaforex/
https://twitter.com/InstaForex

#forex_news # asian_session #instaforex_tv