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, so the market’s pricing remained roughly the same.
- The labour market displayed signs of softening although it remains fairly solid as seen also last week with the strong beat in Jobless Claims.
- 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 eventually rallied back into the 0.65 resistance and then sold off following the more hawkish than expected FOMC dot plot. The price bounced on the support, but it’s now rolling over again as the sellers continue to be in charge. A break below the support should open the door for a fall into the 0.62 handle.
AUDUSD Technical Analysis – 4 hour Timeframe
On the 4 hour chart, we can see that the recent bounce got rejected from a broken trendline which acted as resistance and started to fall again. The moving averages are crossed to the downside, so the momentum remains bearish, and the natural target should be the support of the range at 0.6370. That’s where we can expect the buyers to pile in again with a defined risk below the support to target a rally into the 0.65 resistance. The sellers, on the other hand, will want to see the price breaking below the support to pile in even more aggressively and target the 0.62 handle.
AUDUSD Technical Analysis – 1 hour Timeframe
On the 1 hour chart, we can see that the price got rejected from the downward trendline and the 61.8% Fibonacci retracement level recently. The trend on this timeframe is clearly bearish as the price has been printing lower lows and lower highs. The break below the most recent lower low at 0.6404 suggests that the sellers are likely to take the pair into the 0.6370 support. On the other hand, if the price breaks above the trendline, we should see the buyers piling in to target the 0.65 resistance.
Upcoming Events
Today we will see the latest US Consumer Confidence report which surprised to the downside the last time and weighed on the USD in the short term as Treasury yields fell. On Thursday, we will have another US Jobless Claims data which keeps on showing strength in the labour market maintaining the hawkish pricing in interest rates expectations. Finally, on Friday, we will get the latest US PCE data.
