US:
- The Fed left interest rates unchanged as expected at the last meeting.
- 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 Core PCE came in line with expectations with disinflation continuing steady.
- The labour market displayed signs of softening although it remains fairly solid as seen also with another strong beat in Jobless Claims yesterday and with the beat in Job Openings.
- The ISM Manufacturing PMI beat expectations while the ISM Services PMI came in line with forecasts in another sign that the US economy remains resilient.
- The miss in the ADP report led to some USD weakness which might continue if the NFP data misses forecasts.
- The market doesn’t expect the Fed to hike again at the moment.
Australia:
- The RBA kept interest rates unchanged as expected as they are seeing inflation returning to target with the current level of interest rates.
- The latest monthly CPI showed that core inflation is slowing.
- The labour market is weakening as we got a big miss in July and the bulk of jobs added in August were part time.
- The Australian Manufacturing PMI fell further into contraction while the Services PMI jumped back into expansion.
- 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 recently broke out of the range and pulled back into the broken support now turned resistance which might end up in a classic “break and retest” pattern. This is where the sellers should step in with a defined risk above the resistance to target the 0.6168 level.
AUDUSD Technical Analysis – 4 hour Timeframe
On the 4 hour chart, we can see that we have also the 38.2% Fibonacci retracement level for confluence and the price is indeed reacting to the resistance as we already got a double rejection, which might end up in a double top pattern. The buyers will want to see the price breaking higher to invalidate the bearish setup and position for a rally back into the 0.6500 resistance.
AUDUSD Technical Analysis – 1 hour Timeframe
On the 1 hour chart, we can see that we have a trendline that should confirm the bearish setup in case the price breaks below it. In fact, we can expect more sellers to pile in on a break while the buyers should fold, ultimately increasing the bearish momentum. The buyers, on the other hand, are likely to lean on the trendline to position for a rally into the 0.65 resistance.
Upcoming Events
Today it’s all about the NFP report which is the only one the Fed will see before its next rate decision. The US jobs data going into the NFP was strong, so the expectations might be skewed to the upside.
