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.
- The US CPI last week came in line with expectations, so the market’s pricing remained roughly the same.
- The labour market displayed signs of softening although it remains fairly solid.
- The other important economic data like the ISM Services PMI, Jobless Claims and Retail Sales all beat expectations recently.
- The Fed members are leaning towards a pause in September and the next decision will still be dictated by the economic data.
- The market doesn’t expect the Fed to hike at the September meeting, but there’s now basically 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 continue to slide further into contraction.
- The wage growth has also missed expectations and it’s something that the central banks are watching closely.
- The recent New Zealand Retail Sales beat expectations although the data 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 NZDUSD pair is currently pulling back after a huge selloff from the key 0.6389 resistance. The divergence with the MACD was a signal that the bearish momentum was waning, and a correction was due. The red 21 moving average is acting as a dynamic resistance at the moment, but a break above it should lead to a rally into the 0.60 handle.
NZDUSD Technical Analysis – 4 hour Timeframe
On the 4 hour chart, we can see that on this timeframe we have an uptrend as the price is printing higher highs and higher lows. Although the price action remains messy, we have clear and defined levels. In fact, a break above the 0.5933 resistance should lead to rally into the next resistance around the 0.60 handle. That’s where we should find strong sellers piling in with a defined risk above the level to target new lows.
NZDUSD Technical Analysis – 1 hour Timeframe
On the 1 hour chart, we can see the range between the 0.5895 support and the 0.5933 resistance. The price has been stuck in this range for over a week and at some point we should see a breakout.
Upcoming Events
This week has just a couple of important economic releases with the FOMC rate decision tomorrow being the highlight. The Fed is expected to keep rates unchanged, and the market will focus more on the Dot Plot and Fed Chair Powell’s press conference, although he’s likely to repeat that they remain data dependent. Moving on to Thursday, we will see another US Jobless Claims report, while on Friday we conclude the week with the US PMIs data.
