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 CPI missed expectations across the board bringing the expectations for rate cuts forward.
- The labour market is starting to show 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 latest 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 US Retail Sales beat expectations, while the US PPI missed forecasts by a big margin.
- The recent Fedspeak has been leaning on the hawkish side, but last week’s inflation report pretty much confirmed that the Fed might be done for the cycle.
- 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 has been leaning on a more hawkish side recently, but the central bank remains optimistic on the future outlook.
- The labour market continues to weaken as seen also recently with the bulk of jobs added being part-time.
- The wage price index surprised to the upside as wage growth in Australia remains strong.
- The recent Australian Manufacturing PMI fell further into contraction with the Services PMI plummeting back into contraction as well.
- The RBA Meeting Minutes released today were more hawkish than expected and showed that the central bank is now more worried about inflation expectations getting out of hand.
- 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 finally broke above the key 0.65 resistance and extended the rally towards the 0.66 handle. The next target for the buyers should now be the major trendline around the 0.6650 level where we can also find the 61.8% Fibonacci retracement level. That’s where we can expect the sellers to step in more aggressively with a defined risk above the trendline.
AUDUSD Technical Analysis – 4 hour Timeframe
On the 4 hour chart, we can see more closely the breakout but we can also notice the divergence with the MACD. This is generally a sign of weakening momentum often followed by pullbacks or reversals. In this case, we could see a pullback into the broken resistance now turned support where the buyers will have a better risk to reward setup to target the major trendline. The sellers, on the other hand, will want to see the price falling back below the 0.65 level to pile in and target the lows.
AUDUSD Technical Analysis – 1 hour Timeframe
On the 1 hour chart, we can see that the breakout of the descending triangle led to an increase in the bullish momentum which was enough to finally break above the key resistance zone. More aggressive buyers continue to lean on the red 21 moving average but from a risk management perspective, the trendline offers a better risk to reward opportunity.
Upcoming Events
This week is pretty empty on the data front with the US on holiday for Thanksgiving Day in the final part of the week. Today, we have the FOMC Meeting Minutes but it's unlikely to be market moving given that it's three-weeks old data. Tomorrow, we have the US Jobless Claims report which is probably going to be the most important release of the week. On Thursday, we have the Australian PMIs while on Friday we conclude the week with the latest US PMIs.
