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 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 as seen once again last week with the beat inJobless Claims, although continuing claims missed for a second time in a row.
- The US Retail Sales last week beat expectations by a big margin with positive revisions to the prior figures, suggesting the consumers’ spending remains 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 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 is massively diverging with the MACD which is generally a sign of weakening momentum often followed by pullbacks or reversals. In this case, we got a pullback into the broken support turned resistance which might end up being a classic “break and retest” pattern. If the price continues higher and breaks above the resistance though, we will get a confirmation of a reversal and the NZDUSD pair might rally all the way back to the trendline.
NZDUSD Technical Analysis – 4 hour Timeframe
On the 4 hour chart, we can see that the recent break above the minor trendline and the moving averages crossover switched the bias more to the upside. This might be just a complex correction though and the sellers are likely to step in at the resistance with a defined risk above the level to position for a drop into new lows. The buyers, on the other hand, will want to see the price breaking higher to pile in and start targeting the major trendline around the 0.5980 level.
NZDUSD Technical Analysis – 1 hour Timeframe
On the 1 hour chart, we can see that we’ve been diverging with the MACD for quite some time. The first target of the divergence, in case the price breaks above the resistance, is the swing high around the 0.5925 level. A lot will depend on how the price reacts to the key resistance. A break below the recent higher low around the 0.5838 level should change the market structure on this timeframe back to bearish and likely increase the downside momentum leading to a drop to new lows.
Upcoming Events
Today we will get the latest US PMIs where strong figures should support the greenback, while weak readings are a bit more complicated as the USD might weaken due to falling Treasury yields but also strengthen due to recessionary fears. On Thursday, we will see the US Jobless Claims figures, while on Friday we get the US PCE report which is not expected to change anything for the Fed at this time.