US:
- The Fed left interest rates unchanged as expected.
- The macroeconomic projections were revised higher as the economy showed much stronger resilience than expected and the Dot Plot showed that the majority of members still expects another rate hike by the end of the year with less rate cuts in 2024.
- Fed Chair Powell reaffirmed their data dependency but added that they will proceed carefully as they are trying to find the optimal level of rates. Powell also added that the soft landing is not the base case at the moment, although they are aiming for it.
- The latest US CPI 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 as seen also yesterday with the strong beat in Jobless Claims.
- The market doesn’t expect the Fed to hike again at the moment.
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 NZDUSD has finally pulled back all the way up to the 0.5987 resistance where it sold off from following the more hawkish than expected FOMC dot plot. The price action remains choppy, but the sellers should start coming back into the market with strength unless the price breaks above the resistance invalidating the bearish setup.
NZDUSD Technical Analysis – 4 hour Timeframe
On the 4 hour chart, we can see more closely the strong selloff from the resistance. The price is currently pulling back. Things are messy at the moment as there’s no clear divergence between central banks as they are all moving to the sidelines and watching the tightening to day filtering through the economies.
NZDUSD Technical Analysis – 1 hour Timeframe
On the 1 hour chart, we can see that we have a minor resistance at the previous swing high with the 50% Fibonacci retracement level for confluence. This is where the sellers should step in with a defined risk above the level and target another selloff into the 0.5860 support. More conservative sellers might want to wait for the price to break below the counter-trendline to pile in and extend the fall into the support.
Upcoming Events
Today the biggest event will be the Flash PMIs for the US.
