US:
- The Fed left interest rates unchanged as expected at the last meeting.
- The macroeconomic projections were revised higher, and the Dot Plot showed that the FOMC 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.
- The US CPI yesterday beat expectations on the headline figures, but the core measures came in line with forecasts and the market’s pricing barely changed.
- The labour market remains fairly solid as seen last week with the NFP report and yesterday’s Jobless Claims.
- 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 Fed members continue to cite elevated long-term yields as a reason to proceed carefully and likely pause in November as well.
- The market doesn’t expect the Fed to hike anymore.
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 as seen also today with the Manufacturing PMI.
- 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 couldn’t break above the recent high at 0.6050 and got smacked back down. Yesterday the pair sold off following the US CPI release, but the reaction was a bit perplexing as the core measures came in line with expectations and the market’s pricing hasn’t changed. If that was just an overreaction, we might see the pair going back up and erase the post-CPI losses in the next few days.
NZDUSD Technical Analysis – 4 hour Timeframe
On the 4 hour chart, we can see that as soon as the pair broke the upward trendline, the sellers piled in to target the lows, and the bearish momentum increased following the break of the 0.60 handle and the US CPI release. If the bias has indeed switched to the downside, the sellers are likely to lean on the downward trendline where there’s also the confluence with the 38.2% Fibonacci retracement level and the red 21 moving average.
NZDUSD Technical Analysis – 1 hour Timeframe
On the 1 hour chart, we can see that the bearish momentum seems to be waning as the price is diverging with the MACD. The buyers don’t have much to lean onto other than waiting for the price to break above the trendline to invalidate the bearish setup and start looking forward to new highs. If the price continues lower though and reaches the lows around the 0.5860 level, the buyers should step in more aggressively with a defined risk below the low and position for a rally into the previous high at 0.6050.
Upcoming Events
Today the only notable event on the agenda is the University of Michigan Consumer Sentiment report although it has lost its market moving ability lately. Only big surprises are likely to have an impact on the market.
