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.
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 recent New Zealand inflation and employment data surprised to the upside but the PMIs continue to slide further into contraction.
- 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 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 remains stuck in a range between the low around the 0.5860 level and the resistance around the 0.5987 level. The market participants are likely to keep on selling at resistance and buying at support until we get a clear breakout supported by a fundamental catalyst.
NZDUSD Technical Analysis – 4 hour Timeframe
On the 4 hour chart, we can see that the price action on this timeframe is pretty much a mess. There’s no clear level to lean on except the top and bottom of the range.
NZDUSD Technical Analysis – 1 hour Timeframe
On the 1 hour chart, we can see that the pair recently broke above the downward trendline with the buyers piling in to take the price towards the resistance zone. We now have an upward trendline supporting the current rally. The buyers are likely to step in again around the 0.5952 support where we can also find the 38.2% Fibonacci retracement level and the red 21 moving average for confluence. The sellers, on the other hand, will want to see the price breaking lower to pile in and target the 0.5860 support.
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.
