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.
- Inflation measures since then showed further disinflation.
- The labour market displayed signs of softening although it remains fairly tight.
- Overall, the economic data started to surprise to the downside lately.
- The Fed members are leaning more towards a pause rather than another rate hike.
- The market doesn’t expect the Fed to hike anymore.
New Zealand:
- The RBNZ kept its official cash rate unchanged at the last meeting while stating that it will remain at the restrictive level for the foreseeable future to ensure that inflation comes down back to target.
- The recent New Zealand inflation and employment data surprised to the upside but the PMIs are in contraction with the Services PMI recently plunging into contraction.
- The wage growth has also missed expectations and it’s something that the central banks are watching closely for second round effects.
- The New Zealand Retail Sales beat expectations although remains deeply negative.
- The RBNZ is expected to keep the cash rate steady at the next meeting.
NZDUSD Technical Analysis – Daily Timeframe
On the daily chart, we can see that NZDUSD pulled back into the 0.5987 support turned resistance, where we had also the confluence with the red 21 moving average, and sold off following the NFP report. The miss in the Chinese Services PMI today increased the bearish momentum and the pair broke the previous low.
NZDUSD Technical Analysis – 4 hour Timeframe
On the 4 hour chart, we can see that we’ve been diverging with the MACD for a long time and this is generally a sign of weakening momentum often followed by pullbacks or reversals. In this case, we got a pullback into the 0.5987 resistance where the sellers piled in for another bearish move. We should see the sellers coming into the market at every pullback now.
NZDUSD Technical Analysis – 1 hour Timeframe
On the 1 hour chart, we can see that the price broke below the previous low but the price is overextended as depicted by the distance from the blue 8 moving average. In such instances, we can generally see a pullback into the moving average or some consolidation before the next move. The sellers should lean on the black trendline where they will also have the confluence with the 21 moving average.
Upcoming Events
This week is a bit empty on the data front with just the US ISM Services PMI tomorrow and the US Jobless Claims on Thursday being the main highlights. The market pricing is unlikely to change unless the data comes in really hot in which case, we should see the US Dollar strengthening. On the other hand, weaker readings might just bring forward rate cuts expectations and weigh on the greenback in the short term.
