- The Fed left interest rates unchanged as expected at the last meeting.
- Macroeconomic projections have been revised upwards as the economy has shown much stronger resilience than expected and the Dot Plot showed that the majority of members still expect another rate hike by end of the year with fewer rate cuts in 2024.
- Fed Chairman Powell reiterated its reliance on data, but added that it would proceed cautiously in its attempt to find the optimal level of rates. Powell also added that a soft landing is not the base case scenario at the moment, although that is what they are aiming for.
- The latest US Core PCE was in line with expectations, with disinflation remaining stable.
- The labor market has shown signs of slowing, although it remains quite strong, as also shown by yesterday’s sharp rise in jobless claims and job openings.
- The ISM Manufacturing PMI beat expectations while the ISM Services PMI came in line with forecasts, a further sign that the US economy remains resilient.
- The absence of the ADP report has led to some dollar weakness which could continue if the NFP data does not match forecasts.
- The market is not expecting a further hike from the Fed at this time.
- The RBNZ kept its policy rate unchanged while saying demand growth continues to slow and is expected to decline further as monetary conditions remain restrictive.
- Recent New Zealand inflation and employment data surprised to the upside, but PMIs continue to slide towards contraction.
- Wage growth has also exceeded expectations and is something central banks are watching closely.
- Recent retail sales in New Zealand have exceeded expectations, although the data remains deeply negative.
- The RBNZ is also expected to keep its policy rate stable at the next meeting.
NZDUSD Technical Analysis – Daily Timeline
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 resistance around the 0.5987 level. Market participants will likely continue to sell at resistance and buy 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 over this time frame is quite a mess. There is no clear level to rely on except the top and bottom of the range.
NZDUSD Technical Analysis – 1 Hour Timeframe
On the hourly chart, we can see that the pair recently broke above the downtrend line, with buyers rushing to take the price towards the resistance zone. We now have an uptrend line supporting the current rally. Buyers are likely to intervene again around the 0.5952 support where we can also find the 38.2% Fibonacci retracement level and the red 21 moving average for the confluence. Sellers, on the other hand, will want to see the price move lower to accumulate and target support at 0.5860.
Events to come
Today, it’s all about the NFP report, which is the only one the Fed will see before its next rate decision. US employment data entering the NFP was strong, so expectations could be skewed higher.