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US:

  • The Fed left interest rates unchanged as
    expected at the last meeting.
  • The macroeconomic projections were revised higher
    as the economy showed much stronger resilience than expected and the Dot Plot
    showed that the majority of members still expects another rate hike by the end
    of the year with less rate cuts in 2024.
  • Fed Chair Powell
    reaffirmed their data dependency but added that they will proceed carefully.
  • The latest US Core PCE
    came
    in line with expectations with disinflation continuing steady.
  • The labour market remains
    fairly solid as seen last week with another strong beat in Jobless Claims and the NFP report.
  • The ISM Manufacturing PMI beat
    expectations while the ISM Services PMI came in
    line with forecasts in another sign that the US economy remains resilient.
  • The market doesn’t expect the Fed to hike anymore.

Australia:

  • The
    RBA kept interest rates unchanged as expected as they are seeing inflation
    returning to target with the current level of interest rates.
  • The
    latest monthly CPI showed that core inflation is
    slowing.
  • The
    labour market is weakening as we got a big miss
    in July and the bulk of jobs added in August were part time.
  • The
    Australian Manufacturing PMI fell further into contraction while
    the Services PMI jumped back into expansion.
  • The
    market expects the RBA to hold rates steady at the next meeting as well.

AUDUSD Technical Analysis –
Daily Timeframe

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AUDUSD Daily

On the daily chart, we can see that the AUDUSD pair
was diverging with the
MACD right
when it was trying to break out of the range. This is generally a sign of
weakening momentum often followed by pullbacks or reversals. In this case, the
pair failed to sustain the breakout and bounced back into the range. The buyers
might now have enough conviction to target the top of the range around the 0.65
handle.

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AUDUSD Technical Analysis –
4 hour Timeframe

AUDUSD 4 hour

On the 4 hour chart, we can see that the price
action within the range is a real mess with frequent spikes and erratic
movements. From a risk management perspective, the buyers would be better off
to wait for the price to pull back into the lower bound of the regression
channel around the 0.6380 level where they will also have the confluence with the
red 21 moving average. The
sellers, on the other hand, will want to see the price breaking below the support zone
around the 0.6370 level to position again for new lows.

AUDUSD Technical Analysis –
1 hour Timeframe

AUDUSD 1 hour

On the 1 hour chart, we can see more
closely the bullish setup with the 61.8% Fibonacci
retracement
level adding further confluence to the
support around the 0.6380 level. As previously mentioned, the sellers will want
to see the price breaking below the lower bound of the channel to invalidate
the bullish setup and position for another selloff into new lows.

Upcoming Events

This week the market is likely to focus on the CPI
report as that’s what might change the expectations around the next FOMC rate
decision. Today, we will see the US PPI data and later in the day the FOMC
Meeting Minutes. Tomorrow, it will be the time for the US CPI report, and at
the same time we will also get the latest Jobless Claims figures. On Friday we conclude
the week with the University of Michigan Consumer Sentiment report.

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