US:
- The Fed hiked by 25 bps as expected and kept everything unchanged.
- Fed Chair Powell reaffirmed their data dependency and kept all the options on the table.
- The US economic data keeps on surprising to the upside, but inflation expectations and CPI readings continue to show disinflation with the last two Core CPI M/M figures coming in at 0.16%.
- The US PMIs missed expectations across the board last week, while the US Jobless Claims remained solid.
- Fed Chair Powell’s speech at the Jackson Hole Symposium was mostly in line with what he said previously but he stressed on the need to be careful going forward and that continued strength in the labour market may require further rate hikes.
- At the moment, the market doesn’t expect another hike from the Fed, but the next NFP and CPI data will be crucial to confirm or change this view.
New Zealand:
- The RBNZ kept its official cash rate unchanged while stating that it will remain at the restrictive level for the foreseeable future to ensure that inflation comes down back to target.
- The recent New Zealand inflation and employment data surprised to the upside but the PMIs are in contraction with the Services PMI last week plunging into contraction.
- The wage growth has also missed expectations and it’s something that the central banks are watching closely for second round effects.
- The New Zealand Retail Sales beat expectations although remain deeply negative.
- The RBNZ is expected to keep the cash rate steady at the next meeting.
NZDUSD Technical Analysis – Daily Timeframe
On the daily chart, we can see that NZDUSD broke below the 0.5987 low and opened the door for a fall into the 0.5514 level. The pair started to consolidate as the market awaits key economic data to decide where to go next. The bearish trend remains intact as the price keeps printing lower lows and lower highs and the moving averages are crossed to the downside.
The 0.5987 level will be key to watch as we can also find the red 21 moving average for confluence. The sellers are likely to pile in there with a defined risk above the level to target new lows. The buyers, on the other hand, will need the price to break decisively above the level to switch the bias from bearish to bullish and target a bigger correction towards the 0.61 handle.
NZDUSD Technical Analysis – 4 hour Timeframe
On the 4 hour chart, we can see that the price has been diverging with the MACD for a long time and this is generally a sign of weakening momentum often followed by pullbacks or reversals. In this case, we got many pullbacks with the downward trendline defining the downtrend. A breakout to the upside would be a bad omen for the sellers as the chances of a reversal would increase. The last line of defence will be the resistance at 0.5987 level.
NZDUSD Technical Analysis – 1 hour Timeframe
On the 1 hour chart, we can see that we have a mini range between the 0.5895 support and the 0.5925 resistance. A break to the upside should see the buyers piling in and target the 0.5987 resistance with a further breakout opening the door for a rally into the 0.61 handle. Conversely, a break to the downside should see more sellers piling in and take the pair to new lows.
Upcoming Events
This week is an important one given that we will see many key labour market data for the US, including the NFP, before the next FOMC meeting. Today, we have the US Consumer Confidence and the US Job Openings reports. Tomorrow, we have the US ADP report. Moving on to Thursday, we will see the US Jobless Claims and the US PCE data. Finally, we conclude the week with the US NFP and the ISM Manufacturing PMI on Friday. Although the Fed keeps all the options on the table, it’s also leaning more towards a pause in September, so we will need strong data to make the market to expect a hike at the upcoming meeting.
