Unlike the stock market, the US dollar index is trading rather volatile today. It was steadily falling against its rivals in the range of 103.8-104.0. In the morning, it retreated due to weak macro stats.

As the latest data triggered some concerns about the stability of the economy, Treasury note yields also declined. In the Asian session, the greenback gained momentum. It broke below the key support level of 104 but after that, it rebounded to 103.9.

Now, the US dollar index is hovering near the support level of 103.4. This is the June low. It may also touch 102.9. The resistance level for the US dollar is located at 104.6, which is the high of late May.
The yen was trading near 139.3 in the Asian session. National currencies usually decline amid growing stocks. Japan seems to be an exception to this rule. While the shares of Japanese companies are climbing to new highs, demand for the yen is growing as well.

As a result, the dollar/yen fell to 139.1 yen, moving in the downward range of 139.0–139.7. In case of further rise, the pair is likely to face resistance levels of 139.7 and 140.

However, today, the yen is likely to be the strongest currency in the pair. It could drop below 138.7 and even test 138. The fact is that the Bank of Japan may conduct its first intervention in the foreign exchange market this year.

In order to keep inflation above the 2% target, the regulator consistently pumps the country's economy with liquidity. Sustained inflation needs steady demand and wage growth. To do this, the central bank maintains its ultra-loose monetary policy.

Inflation in Japan largely depends on external factors, namely energy prices. Given the aggressive stances of other central banks or uncertainty over their further moves, the volatility of the yen is growing markedly. Therefore, the Bank of Japan is expected to intervene, using its dollar reserves to buy the yen.

The Reserve Bank of Australia unexpectedly raised the key rate by a quarter of a point again. The regulator did not rule out further tightening as inflation in Australia is still consistently high and far from the 2-3% targets.

This was the twelfth rate hike in a row. The interest rate jumped to the highest level since April 2012. After the unexpected rate increase, Australian Treasurer Jim Chalmers made a speech. At the press conference, he said that the government does not expect a recession in the economy.

However, the Australian dollar is more sensitive to external factors. This is why its movements will depend on the Fed’s rate decision and negotiations between the US and China.

It is hard to predict the outcome of these events. Therefore, the pair was trading at 0.6688. It was moving in the range of 0.6610–0.6685 in the Asian session. Oil prices, which climbed on Monday, lost momentum today.

Commodity currencies tumbled too. So, the upward movement of the AUD/USD pair looked more like consolidation at 0.6660 at the end of the Asian session.

The kiwi also advanced in the morning. The kiwi/dollar pair was trading below 0.6100. It was moving in the range of 0.6070–0.6101.


00:00 Intro
00:32 CME FEDWATCH TOOL
01:07 USVIX
01:39 USDX
02:39 USD/JPY
03:42 Bank of Japan
04:25 The Reserve Bank of Australia
05:03 AUD/USD
05:47 NZD/USD

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