- The Fed raised rates by 25 basis points as expected and left everything unchanged at the last meeting.
- Fed Chairman Powell reaffirmed their reliance on data and kept all options on the table.
- US CPI this week was in line with expectations, so market prices remained about the same.
- The job market has shown signs of slowing, although it remains relatively strong.
- Last week, the ISM services PMI and jobless claims surprised on the rise, reflecting an overall resilient economy.
- Yesterday we saw another rise in jobless claims, followed by strong retail sales and PPI data.
- Fed members are leaning more toward a pause in September and the next decision will still be dictated by economic data.
- The market does not expect the Fed to raise rates at the September meeting and there is only a 33% chance it will hike in November, although that could change if the data continues to heat up.
- The RBNZ kept its policy rate unchanged at the last meeting, while saying it would remain at a restrictive level for the foreseeable future to ensure inflation returned to its target.
- Recent New Zealand inflation and employment data have surprised to the upside, but PMIs are in contraction, with the services PMI recently dipping into contraction.
- Wage growth has also exceeded expectations and central banks are closely monitoring second-round effects.
- Retail sales in New Zealand beat expectations even as the data remains deeply negative.
- Today, the manufacturing PMI index showed a further contraction.
- The RBNZ is expected to keep its policy rate stable at the next meeting.
NZDUSD Technical Analysis – Daily Timeline
On the daily chart, we can see that NZDUSD has diverged with the MACD since the breakout, which is usually a sign of weakening momentum, often followed by pullbacks or reversals. In this case, we see a pullback as sellers rely on the red 21 moving average to position themselves for another sell-off. If price breaks above the moving average, we can expect sellers to pile in around the 0.5987 resistance, which would give them an even better risk of rewarding setup.
NZDUSD Technical Analysis – 4 Hour Timeframe
On the 4-hour chart, we can see that the price action has been choppy, but the pair is trading between key levels with an upward tilt as the price has printed higher highs and higher lows , the moving averages being crossed upwards. A break above the resistance at 0.5930 should lead to a rally towards the resistance at 0.5987, while a break below the support at 0.5892 should lead to a fall to new lows.
NZDUSD Technical Analysis – 1 Hour Timeframe
On the hourly chart, we can take a closer look at the short-term price action between key levels. We now have a range between resistance at 0.5930 and support at 0.5892. An upward breakout is bullish, while a downward breakout is bearish.
Events to come
Now, the only notable report left to be released this week is the University of Michigan Consumer Sentiment Survey. Consumer confidence may have deteriorated due to rising energy prices, which could have translated into higher inflation expectations.