So, it seems like the Federal Reserve (Fed) made a move that was widely expected. They increased the interest rates by 25 basis points (bps), but other than that, they didn`t make any significant changes to their policies.
Fed Chair Powell emphasized that they are closely watching economic data and keeping their options open. The US Consumer Price Index (CPI) was in line with expectations, which didn`t cause much of a stir in the market.
Now, when we look at the labor market, there are some mixed signals. While it`s showing some signs of softening, it`s still considered fairly solid. Last week, we saw some positive surprises in economic indicators like the ISM
Services PMI and Jobless Claims, suggesting that the US economy is resilient. And just recently, there were more positive numbers with Jobless Claims, Retail Sales, and the Producer Price Index (PPI).
However, despite these positive signs, it seems like the members of the Fed are leaning towards hitting the pause button in September. They`re basically saying that their next move will depend on how the economic data unfolds. Right now, the market isn`t expecting the Fed to raise rates in September, and there`s only a 33% chance of a hike in November, although this could change if the economic data continues to show strength.
Shifting gears to New Zealand, the Reserve Bank of New Zealand (RBNZ) decided to keep its official cash rate unchanged in their last meeting. They mentioned that they plan to keep it at this level for a while to bring inflation down to their target. Interestingly, while inflation and employment data in New Zealand have surprised on the upside, the Purchasing Managers` Index (PMI) for services is in contraction territory, and wage growth hasn`t met expectations.
On the bright side, New Zealand`s Retail Sales beat expectations, though the overall data is still in negative territory. Today, the Manufacturing PMI showed further contraction. So, the RBNZ is likely to keep the cash rate steady at their next meeting.
In summary
Both the Fed and the RBNZ seem to be closely monitoring their respective economies and basing their decisions on the data. The Fed is leaning towards a pause, while the RBNZ is keeping rates steady to address inflation concerns. Economic indicators in both countries are painting a complex picture, and it will be interesting to see how these central banks respond to changing circumstances in the coming months.
NZDUSD Technical Analysis – Daily Timeframe
NZDUSD has been moving in a bearish direction, but the RSI indicator is showing signs of divergence. This means that the price momentum is weakening, which could lead to a pullback or reversal.
The sellers are leaning on the 20-day moving average to position for another selloff. If the price breaks above the moving average, the sellers are likely to pile in around the 0.5987 resistance level. This would give them a better risk-to-reward setup.
In other words, the sellers are expecting the price to go down, but they are waiting for confirmation. If the price breaks above the 20-day moving average, it will be a sign that the buyers are taking control. However, if the price stays below the moving average, the sellers are likely to attack and push the price down further.
More detailed technical analysis of NZDUSD can be found in the “NZDUSD Technical Analysis” section.
