USD

  • The Fed left interest rates unchanged as expected with a shift in the statement that indicated the end of the tightening cycle.
  • The Summary of Economic Projections showed a downward revision to Growth and Core PCE in 2024 while the Unemployment Rate was left unchanged. Moreover, the Dot Plot was revised to show three rate cuts in 2024 compared to just two in the last projection.
  • Fed Chair Powell didn't push back against the strong dovish pricing and even said that they are focused on not making the mistake of holding rates high for too long, which implies a rate cut coming soon.
  • The US CPI this week came in line with expectations with the disinflationary progress continuing steady. This was also confirmed by the US PPI the day after where the data missed estimates.
  • The labour market has been showing signs of weakening lately but we got some strong releases recently with the US Jobless Claims and the NFP coming in strongly.
  • The latest ISM Manufacturing PMI missed expectations falling further into contraction, while the ISM Services PMI beat forecasts holding on in expansion.
  • The market expects the Fed to start cutting rates in Q1 2024.

AUD

  • The RBA left interest rates unchanged as expected at the last meeting with the central bank maintaining the usual data dependent language.
  • The recent Monthly CPI report missed expectations across the board which is a welcome development for the RBA.
  • The RBA Governor Bullock has been leaning on a more hawkish side recently, although she remains optimistic on the future outlook.
  • The latest labour market report beat forecasts across the board although the unemployment rate rose more than expected.
  • The wage price index surprised to the upside as wage growth in Australia remains strong.
  • The recent Australian PMIs fell further into contraction for both the Manufacturing and Services sectors.
  • The market expects the RBA to start cutting rates in Q4 2024.

AUDUSD Technical Analysis – Daily Timeframe

AUDUSD Technical Analysis
AUDUSD Daily

On the daily chart, we can see that AUDUSD recently broke above the key trendline following the surprisingly dovish FOMC meeting. This has opened the door for a rally into the 0.68 resistance where we can expect the sellers to step in with a defined risk above the level to target a drop back into the 0.65 support.

AUDUSD Technical Analysis – 4 hour Timeframe

AUDUSD Technical Analysis
AUDUSD 4 hour

On the 4 hour chart, we can see that the pair started to consolidate just above the recent high at the 0.6680 level. This is where the buyers are piling in with a defined risk below the level to position for another rally into the 0.68 handle. The sellers, on the other hand, will want to see the price breaking lower to invalidate the bullish setup and position for a drop into the 0.65 support.

AUDUSD Technical Analysis – 1 hour Timeframe

AUDUSD Technical Analysis
AUDUSD 1 hour

On the 1 hour chart, we can see more closely the rangebound price action between the 0.6680 support and the 0.6730 resistance. This gives us a clear playbook as a break to the upside should lead to a rally into the 0.68 handle, while a break to the downside could trigger a selloff into the 0.65 support.

Upcoming Events

Today the only notable event on the agenda is the release of the US PMIs.