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 recent 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 but there are some signs of softness as seen yesterday with another miss in Continuing Claims.
- The US Retail Sales last week beat expectations by a big margin with positive revisions to the prior figures, suggesting the consumers’ spending is still solid.
- The US PMIs this week showed that the economy now looks more balanced and 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.
New Zealand
- The RBNZ kept its official cash rate unchanged while stating that demand growth continues to ease and it’s expected to decline further with monetary conditions remaining restrictive.
- The New Zealand inflation data last week missed expectations supporting the RBNZ’s stance.
- The latest employment data surprised to the upside.
- The wage growth has also missed expectations and it’s something that the central banks are watching closely.
- The Manufacturing PMI continues to slide further into contraction, but the Services PMI jumped back into expansion.
- 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 NZDUSD pair continues to diverge with the MACD, which is generally a sign of weakening momentum often followed by pullbacks or reversals. The pair recently pulled back into the broken support turned resistance and fell to new lows as the risk sentiment worsened. From a risk management perspective, the sellers will have a much better risk to reward setup leaning on the major trendline but envisioning such a big rally at the moment is very hard.
NZDUSD Technical Analysis – 4 hour Timeframe
On the 4 hour chart, we can see that even on this timeframe we have a divergence with the MACD. The price pulled back into the trendline where we can find the confluence with the 61.8% Fibonacci retracement level and the red 21 moving average. This is where we can expect the sellers to step in with a defined risk above the trendline. The buyers, on the other hand, will want to see the price breaking higher to extend the rally into the 0.5860 resistance.
NZDUSD Technical Analysis – 1 hour Timeframe
On the 1 hour chart, we can see more closely the bearish setup. The buyers leant on the counter-trendline where they also had the red 21 moving average for confluence. The sellers, on the other hand, will want to see the price breaking lower to confirm the rejection from the downward trendline and the Fibonacci level and increase the bearish bets into new lows.
Upcoming Events
Todaywe will get the US PCE report which is unlikely to change anything for the Fed at this point in time.
