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 US CPI last week 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 fairly solid as seen once again last week with the beat in Jobless Claims, although continuing claims surprisingly missed.
- The US PMIs recently showed that the US economy remains pretty resilient.
- The University of Michigan Consumer Sentiment report last Friday missed across the board with the inflation expectations figures spiking back up.
- The Fed members continue to cite elevated long-term yields as a reason to proceed carefully and will likely pause 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 latest monthly CPI showed that core inflation is slowing.
- The labour market is weakening as we got a big miss in July and the bulk of jobs added in August were part time.
- The Australian Manufacturing PMI fell further into contraction while the Services PMI jumped back into expansion.
- The RBA Minutes today were surprisingly hawkish and it looks like the central bank might squeeze in another rate hike if the underlying inflation doesn’t slow faster in the next couple of months.
- 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 broke below the key support zone around the 0.6370 level again but rallied back to retest it. The sellers are likely to pile in around the resistance with a defined risk above it to position for a selloff into new lows. The buyers, on the other hand, will want to see the price breaking above the trendline to switch the bearish bias into a bullish one and start targeting new higher highs.
AUDUSD Technical Analysis – 4 hour Timeframe
On the 4 hour chart, we can see that the price bounced perfectly on the previous low at 0.6285 and rallied all the way back into the support turned resistance where we can also find the confluence with the red 21 moving average and the Fibonacci retracement levels. A break above this resistance should see the price reaching the trendline, which will be the last line of defence for the sellers as a break above it will likely open the door for a rally into the 0.65 handle.
AUDUSD Technical Analysis – 1 hour Timeframe
On the 1 hour chart, we can see that from a risk management perspective, the buyers would be better off waiting for the price to fall back into the previous resistance now turned support around the 0.6330 level where we can find the confluence with the trendline, the red 21 moving average and the 61.8% Fibonacci retracement level. That’s where they will have a better risk to reward setup and can fold as soon as the price breaks below the trendline as the sellers will pile in more aggressively to extend the drop into new lows.
Upcoming Events
Today we will get the US Retail Sales data and it will be interesting to see if consumer spending has weakened or it’s still holding on. On Thursday, we will get the latest Australian labour market report, while later in the day we will see the US Jobless Claims data and we will also hear from Fed Chair Powell with the market focused on any hint about the near term policy outlook.