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 US CPI last week 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 fairly solid as seen once again last week with the beat in Jobless Claims, although continuing claims surprisingly missed.
- The US PMIs recently showed that the US economy remains pretty resilient.
- The University of Michigan Consumer Sentiment report last Friday missed across the board with the inflation expectations figures spiking back up.
- The Fed members continue to cite elevated long-term yields as a reason to proceed carefully and will likely pause 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.
- Today, the New Zealand inflation data missed expectations supporting the RBNZ’s stance.
- The employment data surprised to the upside recently.
- 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 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 as well.
NZDUSD Technical Analysis – Daily Timeframe
On the daily chart, we can see that the NZDUSD pair is still stuck in the range between the 0.5860 support and the 0.6000 resistance. Today, the pair dropped following the miss in the New Zealand inflation data and we can expect the bearish momentum to take the pair into the support level where the buyers will likely step in with a defined risk below the level to target another rally into the 0.60 resistance.
NZDUSD Technical Analysis – 4 hour Timeframe
On the 4 hour chart, we can see that the sellers piled in around the previous swing level at 0.5925 with the red 21 moving average acting as dynamic resistance. There’s no clear level to lean on at the moment, but the sellers are likely to keep the momentum going into the 0.5960 support targeting a break into new lows. The buyers, on the other hand, will want to see the price breaking above the 0.5925 resistance to position for another rally into the 0.60 level.
NZDUSD Technical Analysis – 1 hour Timeframe
On the 1 hour chart, we can see more closely the minor resistance around the 0.5925 level and the support zone at 0.5860. These are the only levels to watch at the moment until we get some more clarity in the next days with the release of new economic data.
Upcoming Events
Today we will get the US Retail Sales data and it will be interesting to see if consumer spending has weakened or it’s still holding on. On Thursday, we will get the US Jobless Claims report and we will also hear from Fed Chair Powell with the market focused on any hint about the near term policy outlook.
