- The Fed left interest rates unchanged as
expected at the last meeting with a shift in the statement that indicated the
end of the tightening cycle.
- The Summary of Economic Projections showed a
downward revision to Growth and Core PCE in 2024 while the Unemployment Rate
was left unchanged. Moreover, the Dot Plot was revised to show three rate cuts
in 2024 compared to just two in the last projection.
- Fed Chair Powell didn’t
push back against the strong dovish pricing and even said that they are focused
on not making the mistake of holding rates high for too long.
- The latest US PCE missed
expectations across the board with the Core 6-month annualised rate falling
below the Fed’s target at 1.9%.
- The labour market has been softening via less job
opportunities rather than more layoffs with the US Job Openings
yesterday missing expectations and the inside data painting an even weaker
- The ISM Manufacturing
yesterday beat expectations although it continues to remain in contraction.
- The market expects the Fed to start cutting rates
in Q1 2024.
- The RBNZ kept its official cash rate
unchanged at the
last meeting stating that demand growth continues to ease and it’s expected to
decline further with monetary conditions remaining restrictive.
- The New Zealand inflation data missed expectations supporting the
- The latest labour market report showed a notable increase in
the unemployment rate and a slowdown in wage growth which is something that will
keep the RBNZ on the sidelines.
- The Manufacturing PMI fell further into contraction
followed by the Services PMI which fell back into contraction.
- The market expects the RBNZ to start
cutting rates in Q2 2024.
NZDUSD Technical Analysis –
On the daily chart, we can see that NZDUSD reached
the key resistance zone
around the 0.64 handle and fell into the trendline. The
pair bounced yesterday as the buyers piled in given that they also had the confluence with the
red 21 moving average and the
50% Fibonacci retracement level.
The target should be the 0.64 handle with a breakout as the ultimate goal.
NZDUSD Technical Analysis –
4 hour Timeframe
On the 4 hour chart, we can see more closely the
bounce on the trendline with the price coming into the 21 moving average and
rejecting it. The buyers will need the pair to break above the moving average
to get some more confirmation for a rally into the 0.64 handle. The sellers, on
the other hand, will want to see the price breaking below the trendline to
invalidate the bullish setup and position for a drop into the 0.61 support.
Analysis – 1 hour Timeframe
On the 1 hour chart, we can see that the latest
leg lower diverged with
the MACD right
at the key trendline. This is generally a sign of weakening momentum often
followed by pullbacks or reversals. In this case, we got the pullback into the
swing high around the 0.6275 level where we had the confluence with the 38.2%
Fibonacci retracement level and the 4-hour 21 moving average. This is where the
sellers stepped in to position for a break below the trendline.
Today we will have another slate of US labour market
data with the release of the US ADP and Jobless Claims figures. Tomorrow, we
conclude the week with the NFP report and the ISM Services PMI.