US:
- The Fed hiked by 25 bps as expected and kept everything unchanged at the last meeting.
- Fed Chair Powell reaffirmed their data dependency and kept all the options on the table.
- The US CPI last week 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.
- The other important economic data like the ISM Services PMI, Jobless Claims and Retail Sales all beat expectations recently.
- The Fed members are leaning towards a pause in September and the next decision will still be dictated by the economic data.
- The market doesn’t expect the Fed to hike at the September meeting, but there’s now basically a 50/50 chance of a hike in November.
Australia:
- The RBA kept its cash rate unchanged as expected at the last meeting as they are seeing signs that the economy is indeed slowing and that will help to return inflation back to target.
- The data is supporting the RBA’s stance as the Australian jobs, wages and inflation data all remain lacklustre.
- The Australian PMIs last month missed expectations remaining in contraction.
- RBA Governor Lowe in his speech reaffirmed that if inflation remains sticky, they will have to tighten more.
- The market expects the RBA to hold rates steady at the next meeting as well.
AUDUSD Technical Analysis – Daily Timeframe
On the daily chart, we can see that the AUDUSD pair remains stuck in a rangebound market as the uncertainty around the global economy and the future rates path is high. The pair might also be consolidating after such a big selloff from the 0.69 handle just to resume the downtrend at some point. The sellers are eyeing the resistance around the 0.65 handle while the buyers will target a breakout to reach the 0.66 handle.
AUDUSD Technical Analysis – 4 hour Timeframe
On the 4 hour chart, we can see more closely the range between the 0.6370 support and the 0.6500 resistance. The buyers continue to have the upper hand as the price has been printing higher highs and higher lows within the range. The target should be the 0.6500 resistance where we can expect the sellers to pile in more aggressively with a defined risk above the level and target the 0.6370 support, and eventually a break lower.
AUDUSD Technical Analysis – 1 hour Timeframe
On the 1 hour chart, we can see that the price action has been very messy in the past few weeks with spikes all over the chart. A break above the resistance zone around the 0.6445 level should lead to a rally into the 0.6470 resistance. The sellers, on the other hand, might lean on this 0.6445 resistance to target a fall into the 0.6405 support zone.
Upcoming Events
This week has just a couple of important economic releases with the FOMC rate decision tomorrow being the highlight. The Fed is expected to keep rates unchanged, and the market will focus more on the Dot Plot and Fed Chair Powell’s press conference, although he’s likely to repeat that they remain data dependent. Moving on to Thursday, we will see another US Jobless Claims report, while on Friday we conclude the week with the Australian and US PMIs data.
