Fundamental Overview
Yesterday, we got the US ISM Manufacturing PMI and even though the headline number missed expectations, under the hood the report was better than the prior month.
The bad news was new orders falling further into contraction, which is a proxy for demand, and it’s generally considered as a leading indicator.
Tight monetary policy of course has been weighing a lot on the manufacturing sector and if the Fed manages to avoid a hard landing as it cuts rates in the next months, we could see a rebound in Q4.
From a monetary policy perspective, the data didn’t change much for the Fed expectations although the probabilities for a 50 bps cut edged a bit higher. For the RBNZ, the market sees a 40% probability of a 50 bps cut in October and a total of 75 bps of easing by year-end.
NZDUSD Technical Analysis – Daily Timeframe
On the daily chart, we can see that NZDUSD is testing a key support zone around the 0.6175 level where we can find the confluence of the trendline and the 38.2% Fibonacci retracement level. We can expect the buyers to step in with a defined risk below the trendline to position for a rally into a new high. The sellers, on the other hand, will want to see the price breaking lower to increase the bearish bets into the 0.6050 support.
NZDUSD Technical Analysis – 4 hour Timeframe
On the 4 hour chart, we can see more clearly the setup around the 0.6175 level. There’s also a counter-trendline defining the bearish momentum of the pullback. The buyers will want to see the price breaking higher to increase the bullish bets into new highs, while the sellers will likely lean on it to position for a break below the major upward trendline.
NZDUSD Technical Analysis – 1 hour Timeframe
On the 1 hour chart, we can see that the price consolidated near the trendline with no major reaction from the ISM Manufacturing PMI. There’s not much else we can glean from this timeframe as the buyers will just look for a bounce, while the sellers will look for a break. The red lines define the average daily range for today.
Upcoming Catalysts
Today we have the US Job Openings. Tomorrow, we get the US Jobless Claims figures and the ISM Services PMI. Finally, on Friday, we conclude the week with the US NFP report.
