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 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 pretty resilient as seen once again last week with the beat inJobless Claims, although continuing claims missed for a second time in a row.
- The US Retail Sales last week beat expectations by a big margin with positive revisions to the prior figures, suggesting the consumers’ spending remains resilient.
- Fed Chair Powelland other FOMC members continue to highlight the rise in long term yields as doing the job for the Fed and therefore they are expected to keep rates steady 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 continues to weaken as seen also last week with the miss in the employment change and the losses in full-time employment.
- The Australian Manufacturing PMI fell further into contraction with the Services PMI plummeting back into contraction as well.
- The recent RBA Minutes 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.
AUDUSD Technical Analysis – Daily Timeframe
On the daily chart, we can see that the bearish momentum in the AUDUSD pair remains weak as shown also by the divergence with the MACD. The price has recently bounced around the previous lows and rallied back into the trendline and the resistance zone where we have also the red 21 moving average for confluence. This is where the sellers are likely to step in with a defined risk above the resistance to position for another drop into the lows eventually aiming for a downside breakout.
AUDUSD Technical Analysis – 4 hour Timeframe
On the 4 hour chart, we can see that the recent consolidation formed a descending triangle with the support around the 0.6285 level and trendline defining the boundaries. A breakout on either side generally leads to a strong and sustained move in the direction of the breakout. A break to the upside should trigger a rally back to the 0.65 handle, while a break to the downside should lead to a selloff back to the 2022 low.
AUDUSD Technical Analysis – 1 hour Timeframe
On the 1 hour chart, we can see more closely the resistance around the 0.6370 level where the sellers should step in and target a drop into the lows. The buyers, on the other hand, will want to see the price breaking higher to pile in and target the 0.65 handle.
Upcoming Events
Today we will get the latest US PMIs where strong figures should support the greenback, while weak readings are a bit more complicated as the USD might weaken due to falling Treasury yields but also strengthen due to recessionary fears. Tomorrow, we will get the Australian CPI report where higher than expected figures, especially on the core measures, could raise the risk of another rate hike from the RBA given the recently hawkish Minutes. On Thursday, we will see the US Jobless Claims figures, while on Friday we get the US PCE report which is not expected to change anything for the Fed at this time.
