- The Fed left interest rates unchanged as expected with basically no change to the statement.
- Fed Chair Powell stressed once again that they are proceeding carefully as the full effects of policy tightening have yet to be felt.
- The recent US Core PCE came in line with expectations.
- The labour market is starting to show some weakness as Continuing Claims yesterday showed another increase and the NFP data last Friday missed across the board.
- The US Consumer Confidence fell for the third consecutive month although the data beat expectations.
- The US ISM Manufacturing PMI last week missed expectations by a big margin, followed later on Friday with a disappointing ISM Services PMI, although the index remained in expansion.
- The market doesn’t expect the Fed to hike anymore.
- 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 recent inflation data missed expectations supporting the RBNZ’s stance.
- The latest labour market report showed a notable increase in the unemployment rate and a slowdown in wage growth which is something that is likely to keep the RBNZ on the sidelines.
- The Manufacturing PMI fell further into contraction today.
- The market doesn’t expect the RBNZ to hike anymore.
NZDUSD Technical Analysis – Daily Timeframe
On the daily chart, we can see that the NZDUSD pair last week surged into the key 0.60 resistance after the less hawkish than expected FOMC and the disappointing US labour market data. This week though, the pair sold off erasing most of the gains from last week as the US Dollar is likely starting to be seen as the best out of a bad bunch.
NZDUSD Technical Analysis – 4 hour Timeframe
On the 4 hour chart, we can see that from a risk management perspective, the sellers are likely to lean on the downward trendline where we can find the confluence with the major trendline, the red 21 moving average and the 61.8% Fibonacci retracement level. The buyers, on the other hand, will want to see the price breaking higher to invalidate the bearish setup and position for a rally back to the highs.
NZDUSD Technical Analysis – 1 hour Timeframe
On the 1 hour chart, we can see that the latest leg lower diverged with the MACD which is generally a sign of weakening momentum often followed by pullbacks or reversals. In this case, it might be a confirmation for a pullback into the 0.5930 resistance zone where the sellers will pile in for a drop into the lows. If the price manages to drop into the support zone around the 0.5860 level, the buyers are likely to step in with a defined risk below the level to position for a rally into the trendline and target a breakout.
Today the only market moving event will be the release of the University of Michigan Consumer Sentiment report.