USD
- The Fed left interest rates unchanged as expected with basically no change to the statement.
- Fed Chair Powell stressed once again that they are proceeding carefully as the full effects of policy tightening have yet to be felt.
- The recent US Core PCE came in line with expectations.
- The labour market is starting to show some weakness as Continuing Claims are now rising at a fast pace and the recent NFP report missed across the board.
- The US Consumer Confidence and University of Michigan Consumer Sentiment continue to fall.
- The recent US ISM Manufacturing PMI missed expectations by a big margin, followed by a disappointing ISM Services PMI, although the latter remained in expansion.
- The recent Fedspeak has been leaning on the hawkish side, but the inflation and labour market reports before the next meeting will decide whether they will indeed hike or not.
- The market doesn’t expect the Fed to hike anymore.
AUD
- The RBA raised the cash rate by 25 bps as expected as the central bank judged that the move was warranted to be more assured that inflation would return to target in a reasonable timeframe.
- The CPI report recently surprised to the upside prompting the market to price in a higher chance of another rate hike from the RBA in November, which is what we eventually got.
- The RBA Governor Bullock downplayed the beat in the CPI data and made the market to pare back the rate hike bets.
- The labour market continues to weaken as seen also recently with the miss in the employment change and the losses in full-time employment.
- The Australian Manufacturing PMI fell further into contraction with the Services PMI plummeting back into contraction as well.
- The market expects the RBA to hold rates steady at the next meeting.
AUDUSD Technical Analysis – Daily Timeframe
On the daily chart, we can see that AUDUSD rejected the key resistance around the 0.65 handle and erased all the gains seen after the FOMC and the NFP report. The pair has been ranging for months as the uncertainty in the market remains high. We will likely need some strong fundamental catalyst to trigger a more sustained trend.
AUDUSD Technical Analysis – 4 hour Timeframe
On the 4 hour chart, we can see that the selloff from the key resistance found some support around the upward trendline and the 0.64 handle, but eventually the price fell below it triggering even more selling. The price since then pulled back into support now turned resistance where the sellers stepped in once again with a defined risk above the level to position for another drop into the lows.
AUDUSD Technical Analysis – 1 hour Timeframe
On the 1 hour chart, we can see that the last leg lower diverged with the MACD which is generally a sign of weakening momentum often followed by pullbacks or reversals. In this case, we got a pullback into the resistance, but the break above the trendline is making things less clear. We should now have a mini range between the 0.64 resistance and the 0.6365 support. A break on either side is likely to lead to a more sustained move with the buyers targeting the 0.65 handle on the upside and the sellers targeting the 0.63 handle on the downside.
Upcoming Events
This week we have some top tier economic releases. We begin today with the US CPI report which might be one of the most important events of the week. Tomorrow, we have the Australian Wages data and later in the day the US Retail Sales and PPI reports. On Thursday, we conclude with the Australian labour market report and the latest US Jobless Claims figures.