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 yesterday 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 has eventually reached the upper bound of the range but sold off soon after following the more hawkish than expected FOMC dot plot. The pair erased over a week of gains in just a couple of days which might be a hint that the bearish momentum is strong, and it takes just one good catalyst to make the pair fall hard.
AUDUSD Technical Analysis – 4 hour Timeframe
On the 4 hour chart, we can see that the pair is still stuck in the range between the 0.6370 support and the 0.6500 resistance. The price has bounced near the support and it’s now pulling back into the red 21 moving average where we have also the confluence with the 50% Fibonacci retracement level. This is where the sellers should step in again with a defined risk above the Fibonacci level and target a break below the support.
AUDUSD Technical Analysis – 1 hour Timeframe
On the 1 hour chart, we can see more closely the bearish setup with the previous lower low acting as resistance now along with the 50% Fibonacci retracement level. The buyers will want to see the price breaking above the resistance to invalidate the bearish setup and pile in for a rally into the 0.6500 level again and aim for a breakout.
Upcoming Events
Today we only have the US Flash PMIs left as we head to the weekend.
