US
- The Fed left interest rates unchanged as expected at the last meeting.
- The macroeconomic projections were revised higher, and the Dot Plot showed that the FOMC still expects another rate hike by the end of the year with less rate cuts projected in 2024.
- Fed Chair Powell reaffirmed their data dependency but added that they will proceed carefully.
- The recent US CPI beat expectations on the headline figures, but the core measures came in line with forecasts and the market’s pricing barely changed.
- The labour market remains pretty resilient but there are some signs of softness as seen yesterday with another miss in Continuing Claims.
- The US Retail Sales last week beat expectations by a big margin with positive revisions to the prior figures, suggesting the consumers’ spending is still solid.
- The US PMIs this week showed that the economy now looks more balanced and resilient.
- Fed Chair Powelland other FOMC members continue to highlight the rise in long term yields as doing the job for the Fed and therefore they are expected to keep rates steady in November as well.
- The market doesn’t expect the Fed to hike anymore.
Australia
- The RBA kept interest rates unchanged as expected as they are seeing inflation returning to target with the current level of interest rates.
- The CPI report this week surprised to the upside prompting the market to price in a higher chance of another rate hike from the RBA in November.
- The labour market continues to weaken as seen also last week with the miss in the employment change and the losses in full-time employment.
- The RBA Governor Bullock downplayed the beat in the CPI data and made the market to pare back the rate hike bets.
- The Australian Manufacturing PMI fell further into contraction with the Services PMI plummeting back into contraction as well.
- The recent RBA Minutes were surprisingly hawkish but as we have seen this week, the RBA needs more data before deciding on another rate hike.
- 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 the AUDUSD pair continues to massively diverge with the MACD, which is generally a sign of weakening momentum often followed by pullbacks or reversals. In this case, we continue to just get the pullbacks into the trendline but watch out for an upside breakout as it should confirm a reversal and trigger a rally towards the 0.65 handle.
AUDUSD Technical Analysis – 4 hour Timeframe
On the 4 hour chart, we can see that we got not one, but two fakeouts in just two trading days. The price action remains messy and erratic within the descending triangle and the only possible levels to lean on are the trendline and the support around the 0.6285 level. In fact, we can expect the sellers to step in again around the trendline where we can also find the 61.8% Fibonacci retracement level for confluence. The buyers, on the other hand, will want to see a break above the trendline to pile in and position for a rally back into the 0.65 handle.
AUDUSD Technical Analysis – 1 hour Timeframe
On the 1 hour chart, we can see that the trend on this timeframe is bullish as the price continues to print higher highs and higher lows with the moving averages being crossed to the upside. More aggressive buyers might lean on the minor upward trendline, where we have also the red 21 moving average for confluence, to position for a break above the major trendline with a better risk to reward ratio. The sellers, on the other hand, will want to see the price breaking below the minor trendline to increase the bearish bets into the 0.6285 support, ultimately targeting a breakout.
Upcoming Events
Todaywe will get the US PCE report which is unlikely to change anything for the Fed at this point in time.
