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 Core PCE came in line with expectations with disinflation continuing steady.
- The labour market displayed signs of softening although it remains fairly solid as seen also last week with a strong beat in Jobless Claims.
- The ISM Manufacturing PMI beat expectations yesterday in another sign that the US economy remains resilient.
- The market doesn’t expect the Fed to hike again at the moment.
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.
- 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 got rejected from the 0.65 resistance again and sold off into the support, ultimately breaking it. The target for the sellers should be the 2022 low around the 0.6168 level. For now, we can expect the pullbacks to be faded as the sellers remain in control.
AUDUSD Technical Analysis – 4 hour Timeframe
On the 4 hour chart, we can see that the pair is now a bit overstretched on the downside 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. In fact, we might see a pullback into the broken support turned resistance which could end up in a classic “break and retest” pattern. This is where we can expect the sellers to step in with a defined risk above the resistance to target the 0.6168 level. The buyers, on the other hand, will want to see the price breaking above the resistance to start targeting the 0.65 level again.
AUDUSD Technical Analysis – 1 hour Timeframe
On the 1 hour chart, we can see that we have a trendline that might act as resistance in case the bearish momentum proves to be strong. That will be the first shorting point for the sellers, with the resistance around the 0.6370 being the last line of defence. The buyers should pile in at every break, but they will need the price to rally above the 0.6380 level to invalidate the bearish setup and target the 0.65 resistance.
Upcoming Events
This week we have many key economic releases that will culminate in the US NFP report on Friday. Today, we will have the US Job Openings data which led to a strong rally the last time as the big miss made Treasury yields to fall due to less labour market tightness and less hawkish Fed expectations. Tomorrow, it will be the time for the ADP report and the ISM Services PMI. On Thursday, we will see the Jobless Claims data, which continues to show a solid labour market. Finally on Friday, it will be the time for the NFP report which is the only one the Fed will see before its next rate decision.
