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.
- The US CPI this week came in line with expectations, so the market’s pricing remained roughly the same.
- The labour market displayed signs of softening although it remains fairly solid.
- Last week the ISM Services PMI and Jobless Claims surprised to the upside, which point to a resilient economy overall.
- Yesterday, we got yet another beat in Jobless Claims followed by strong Retail Sales and PPI data.
- The Fed members are leaning more towards a pause in September and the next decision will still be dictated by the economic data.
- The market doesn’t expect the Fed to hike at the September meeting and there’s just a 33% chance of a hike in November, although that can change if the data keeps on running hot.
Australia:
- The RBA kept its cash rate unchanged as widely expected as they are seeing signs that the economy is indeed slowing and that will help to return inflation back to target.
- The data is supporting the RBA’s stance as the Australian jobs, wages and inflation data all remain lacklustre.
- The Australian PMIs also missed expectations remaining in contraction.
- RBA Governor Lowe in his speech reaffirmed that if inflation remains sticky, they will have to tighten more.
- The market expects the RBA to hold rates steady at the next meeting as well.
AUDUSD Technical Analysis – Daily Timeframe
On the daily chart, we can see that AUDUSD remains in a consolidation phase as the price is stuck between the support at 0.6370 and the resistance at 0.6500. The price is eyeing the resistance at the moment, and we can expect to find sellers stepping in there with a defined risk above the resistance to target the support.
AUDUSD Technical Analysis – 4 hour Timeframe
On the 4 hour chart, we can see that on this timeframe the pair is in an uptrend as the price has been printing higher highs and higher lows with the moving averages being crossed to the upside. We can expect the buyers to come into the market if we see a pullback and target the resistance.
AUDUSD Technical Analysis – 1 hour Timeframe
On the 1 hour chart, we can see that AUDUSD has been trading around key levels and the recent breakout to the upside opened the door for a rally into the 0.6500 resistance. If the price pulls back into the resistance turned support at 0.6450, we can expect the buyers to pile in with a defined risk below the support to target the resistance. The sellers, on the other hand, will want to see the price breaking below the support to pile in and target the 0.6370 support.
Upcoming Events
Today the only notable report left to be released for this week is the University of Michigan Consumer sentiment survey. Consumer sentiment might have deteriorated given higher energy prices and that might have filtered to higher inflation expectations.
