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 solid.
- Overall, the economic data started to surprise to the downside lately.
- This week the ISM Services PMI and Jobless Claims surprised to the upside.
- The Fed members are leaning more towards a pause in September rather than another rate hike.
- The market doesn’t expect the Fed to hike at the September meeting, but there’s now a 50/50 chance of a hike in November.
New Zealand:
- The RBNZ kept its official cash rate unchanged at the last meeting 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 recently 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 remains 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 the bearish momentum in the NZDUSD pair seems to be waning as the pair started to chop around below the 0.5987 level. The bearish bias though remains intact as the price has not yet broken the most recent lower high around the 0.60 handle and the moving averages are crossed to the downside.
NZDUSD Technical Analysis – 4 hour Timeframe
On the 4 hour chart, we can see that we continue to have a massive divergence with the MACD which is generally a sign of weakening momentum often followed by pullbacks or reversals. In this case, the target should be the 0.6117 level, but the price should first take out the 0.60 handle before rallying all the way up to the 0.6117 level.
NZDUSD Technical Analysis – 1 hour Timeframe
On the 1 hour chart, we can see that we recently took out the resistance around the 0.5895 level. We might see the buyers piling in here with a defined risk below the level to target the 0.5930 resistance first, and eventually the 0.60 handle. The sellers, on the other hand, will want to see the price falling back below the 0.5895 level to invalidate the bullish setup and position for another fall into the lows targeting a break lower.
