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 and brought down Treasury yields weakening the US Dollar, but the US Jobless Claims came out better than expected once again and supported the USD.
- 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 after breaking the May low and falling into the 0.59 handle, NZDUSD rallied back to retest the broken support now turned resistance before restarting the downtrend. The sellers are firmly in control and the breakout opened the door for a fall into the 0.5514 level.
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 while. This is generally a sign of weakening momentum often followed by pullbacks or reversals. In this case, we got the pullback into the trendline where we had also the confluence with the 38.2% Fibonacci retracement level. This is where the sellers piled in with a defined risk above the level to target new lows. The buyers will need the price to break above the trendline to switch the bias from bearish to bullish and start targeting new higher highs.
NZDUSD Technical Analysis – 1 hour Timeframe
On the 1 hour chart, we can see that the price is bouncing from the previous low. A good resistance for the sellers might be the one around the 0.5925 level where the price has reacted to multiple times and where we can also find the red 21 moving average for confluence. More conservative sellers may want to wait for the price to break below the recent low to pile in and target new lows.
Upcoming Events
Today the only major event is Fed Chair Powell’s speech at the Jackson Hole Symposium. The expectations though are for him to take a “wait and see” approach as we have more key economic data ahead before the next FOMC meeting.
