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 yesterday with the beat inJobless Claims, although continuing claims missed for a second time in a row.
- 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 US Retail Sales this week beat expectations by a big margin with positive revisions to the prior figures.
- The Fed members continue to cite elevated long-term yields as a reason to proceed carefully and will likely pause in November as well.
- Fed Chair Powell yesterday highlighted the rise in long term yields as well and the need to “proceed carefully”.
- 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 this week 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 managed to eventually break the low following the miss in the New Zealand CPI and the strong US data. The bearish momentum continues to be weak, but the bias remains skewed to the downside. The recent drop got a bit overstretched as depicted by the distance from the blue 8 moving average. In such instances, we can generally see a pullback into the moving average or some consolidation before the next move.
NZDUSD Technical Analysis – 4 hour Timeframe
On the 4 hour chart, we can see that we have a good resistance now around the 0.5860 level where we can find the confluence with the trendline, the 38.2% Fibonacci retracement level and the red 21 moving average. This is where we can expect the sellers to keep piling in with a defined risk above the trendline to target new lows. The buyers, on the other hand, will want to see the price breaking higher to invalidate the bearish setup and target a rally back into the 0.60 handle.
NZDUSD Technical Analysis – 1 hour Timeframe
On the 1 hour chart, we can see more closely the key levels to watch out for. From a risk management perspective, the best spot for the sellers was the resistance around the 0.5860 level. Late sellers may want to wait for the price to take out the low before joining the trend but with a worse risk to reward setup. The buyers, on the other hand, should wait for the break above the trendline before considering new longs.