US:
- The Fed hiked by 25 bps as expected and kept everything unchanged at the last meeting.
- Fed Chair Powell reaffirmed their data dependency and kept all the options on the table.
- Inflation measures since then showed further disinflation.
- The labour market displayed signs of softening although it remains fairly tight.
- Overall, the economic data started to surprise to the downside lately.
- The Fed members are leaning more towards a pause rather than another rate hike.
- The market doesn’t expect the Fed to hike anymore.
Australia:
- The RBA kept its cash rate unchanged as widely expected 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 missed expectations lately.
- The Australian PMIs also missed expectations remaining in contraction.
- 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 today the AUDUSD pair sold off as the Chinese Services PMI missed expectations by a big margin. The RBA also seems to be done with their tightening cycle, so there’s not much support for the AUD on the fundamentals side, while there’s support for the USD as a safe haven currency. The pair is now at the previous lows, and we might see a bounce as we await the US data next. The bearish trend nonetheless remains intact and the target for the sellers is the 0.6168 level.
AUDUSD Technical Analysis – 4 hour Timeframe
On the 4 hour chart, we can see that we’ve been ranging between the 0.6370 support and the 0.6500 resistance. The last week it seemed like the pair could at least correct into the 0.6616 level as China stepped up support for the economy and the US data missed expectations, but fears of a bigger global slowdown are likely prevailing. A break below the support should see more sellers piling in and extend the drop into the 0.6168 level.
AUDUSD Technical Analysis – 1 hour Timeframe
On the 1 hour chart, we can see that the price is now overextended as depicted by the distance from the blue 8 moving average. In such instances, we can see the price pulling back into the moving average or consolidate before the next move. The buyers are likely to step in here with a defined risk below the support to target the 0.66 handle. The sellers, on the other hand, will want to see the price breaking lower to pile in even more and target new lows.
Upcoming Events
This week is a bit empty on the data front with just the US ISM Services PMI tomorrow and the US Jobless Claims on Thursday being the main highlights. The market pricing is unlikely to change unless the data comes in really hot in which case, we should see the US Dollar strengthening. On the other hand, weaker readings might just bring forward rate cuts expectations and weigh on the greenback in the short term.
