US:
- The Fed left interest rates unchanged as expected.
- The macroeconomic projections were revised higher as the economy showed much stronger resilience than expected and the Dot Plot showed that the majority of members still expects another rate hike by the end of the year with less rate cuts in 2024.
- Fed Chair Powell reaffirmed their data dependency but added that they will proceed carefully as they are trying to find the optimal level of rates. Powell also added that the soft landing is not the base case at the moment, although they are aiming for it.
- The latest US CPI came in line with expectations with the Core measure continuing to show disinflation.
- The labour market displayed signs of softening although it remains fairly solid as seen also yesterday with another beat in Jobless Claims.
- The US Consumer Confidence this week missed expectations although the jobs details were positive.
- The market doesn’t expect the Fed to hike again at the moment.
Australia:
- The RBA kept its cash rate unchanged as expected at the last meeting as they are seeing signs that the economy is indeed slowing and that will help to return inflation back to target.
- The data is supporting the RBA’s stance as the Australian jobs, wages and inflation data all remain lacklustre.
- The Australian Manufacturing PMI fell further into contraction while the Services PMI jumped back into expansion.
- RBA Governor Lowe in his speech reaffirmed that if inflation remains sticky, they will have to tighten more.
- The market expects the RBA to hold rates steady at the next meeting as well.
AUDUSD Technical Analysis – Daily Timeframe
On the daily chart, we can see that the AUDUSD pair recently broke out of the range but rallied back into it soon after. It looks like the market wants something more on the fundamental side to keep pushing to the downside. The sellers are likely to step in again around the upper bound of the range with a defined risk above it to position for another selloff into the support.
AUDUSD Technical Analysis – 4 hour Timeframe
On the 4 hour chart, we can see more closely the fakeout below the 0.6370 support and the strong bounce back into the highs. The price broke through the previous swing high and it’s now approaching the key resistance around the 0.65 level. This rally is now getting overstretched as depicted by the distance from the blue 8 moving average. In such instances, we can generally see a pullback into the moving average or some consolidation before the next move.
AUDUSD Technical Analysis – 1 hour Timeframe
On the 1 hour chart, we can see that we have minor upward trendline that with the moving averages will act as support for the buyers. If the price breaks below the trendline, the sellers will have even more conviction to keep targeting the bottom of the range.
Upcoming Events
Today the only notable release will be the US PCE report. The data is unlikely to change anything for the market unless we get some big surprises.