USD
- The Fed left interest rates unchanged as expected 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, which implies a rate cut coming soon.
- The US CPI last week came in line with expectations with the disinflationary progress continuing steady. This was also confirmed by the US PPI the day after where the data missed estimates.
- The labour market has been showing signs of weakening lately but we got some strong releases recently with the US Jobless Claims and the NFP coming in strongly.
- The US Retail Sales last week beat expectations across the board as consumer spending continues to hold.
- The latest ISM Manufacturing PMI missed expectations falling further into contraction, while the ISM Services PMI beat forecasts holding on in expansion.
- The market expects the Fed to start cutting rates in Q1 2024.
AUD
- The RBA left interest rates unchanged as expected at the last meeting with the central bank maintaining the usual data dependent language.
- The recent Monthly CPI report missed expectations across the board which is a welcome development for the RBA.
- The RBA Governor Bullock has been leaning on a more hawkish side recently, although she remains optimistic on the future outlook.
- The latest labour market report beat forecasts across the board although the unemployment rate rose more than expected.
- The wage price index surprised to the upside as wage growth in Australia remains strong.
- The Australian PMIs improved recently but remain in contraction.
- The market expects the RBA to start cutting rates in Q4 2024.
AUDUSD Technical Analysis – Daily Timeframe
On the daily chart, we can see that AUDUSD recently broke above the key trendline following the surprisingly dovish FOMC meeting. This has opened the door for a rally into the 0.68 resistance where we can expect the sellers to step in with a defined risk above the level to target a drop back into the 0.65 support.
AUDUSD Technical Analysis – 4 hour Timeframe
On the 4 hour chart, we can see that the pair started to consolidate just above the recent high at the 0.6680 level. This is where the buyers piled in with the red 21 moving average adding some confluence. The sellers, on the other hand, will want to see the price breaking below the support to invalidate the bullish setup and position for a drop into the 0.65 support.
AUDUSD Technical Analysis – 1 hour Timeframe
On the 1 hour chart, we can see more closely the rangebound price action between the 0.6680 support and the 0.6730 resistance. The breakout to the upside points to another rally into the 0.68 handle, so the we might see the buyers piling in with more conviction now.
Upcoming Events
This week is a bit empty on the data front as we head into the Christmas holidays. Tomorrow, we have the US Consumer Confidence report. On Thursday, we get the latest US Jobless Claims data, while on Friday we conclude the week with the US PCE report.
